Drought Could Halt US Cattle Herd Expansion

The winter drought may be finishing off the latest US cattle herd expansion as the daily average cow slaughter floats well above last year and the 2012-2016 average.

Already slowing down, US cattle producers appear to be weeding out their older cows more aggressively.  The Federally Inspected daily average cow slaughter on a monthly basis shows significant increases.

March’s daily average cow slaughter came to 24,232 head, compared with 24,050 in February and 24,741 in January.  More importantly, March’s daily average was up 2,397, or 11.0%, from 21,835 in March of 2017 and up 1,936, or 8.68%, from the 2012-2016 average of 22,296.

US Federally Inspected cow slaughter has shown beef and dairy components increasing 10% and 5%, respectively, the LMIC said in a newsletter to Extension Agents.  National cow slaughter levels were expected to remain above 2017 until mid-summer and maybe longer.




Even with the increased slaughter, cutter cow cutout values from the USDA’s Agricultural Marketing Service remain above 2017.  Typically, this would increase seasonally because of higher demand for ground beef.

However, the wholesale value has been flat all year and has had a limiting effect on cull cow prices, the LMIC said.

In fact, Southern Plains slaughter cow prices took a downturn this month.

Year-to-date, the average heavy carcass (500 pounds and heavier) price has been $125.66 per cwt, the LMIC said.  This is down $3.83, or 3.0% from a year earlier.  The price of lighter carcasses (400 to 500 pounds) also has declined, slipping $4.19 per cwt, or 3.3%.

Slaughter cow imports, too, have been below a year ago contributing to the puzzle.

Regionally, prices for 500-pound and heavier carcasses in the Southcentral states of Texas, Oklahoma, Nebraska, Kansas and Colorado so far this year averaged 3.8% below 2017.

In the eastern 26 states, which are reported as a category by AMS (from Vermont to Florida to Indiana), prices declined 5.3%.

The north central region of Nebraska, Wyoming, Montana, South Dakota and North Dakota this year’s price averaged down 2.3%, while the Midwest (Montana, Iowa, Minnesota, Wisconsin and Illinois slipped 6.4%.

In one region, the west, (Arizona, Nevada, Utah, California, Idaho, Oregon and Washington) slaughter cow prices have been higher year-over-year by 6.9%.

In May 2017, CS Beef, Kuna, Idaho, completed construction and began operations of its new packing plant.  Competition for animals in that region has increased cull cow prices.

There are two keys to cull cow prices.  First, low milk prices persist and could increase slaughter even more, the LMIC said.  And drought could expand, sending more beef cows to slaughter.




There were no sales on the Livestock Exchange Video Auction Wednesday.  Last Wednesday, 161 head sold for 1- through 9-day delivery at $122 per cwt, and 338 sold for 1- through 17-day delivery at $120.

Cash cattle trade was reported at $120 to $121 per cwt on a live basis, down $1 from last week and lightly at $195 dressed, steady with the upper end of last week’s range.

The USDA choice cutout Thursday was up $1.62 per cwt at $220.15, while select was up $1.33 at $204.48.  The choice/select spread widened to $15.67 from $15.38 with 115 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Wednesday, was $139.49 per cwt, up $1.29.  This compares with Thursday’s Apr settlement of $140.17, up $0.32 and May’s close of $140.30, down $1.05.