Drought Hastening Cow, Heifer Cull

Drought advanced rapidly across Oklahoma in July, said Oklahoma State University Extension Livestock Specialist Derrell Peel, in a letter to Extension Agents called Cow-Calf Corner, and the beef industry is poised to see the largest single-year beef cow herd decrease in more than 35 years.

At the end of June, the National Weather Service Drought Monitor showed 30.8% of Oklahoma was in some stage of drought with another 15.2% abnormally dry, Peel said.  Four weeks later, it showed 100% of the state was dry with 99.8% in some stage of drought.  In fact, 92.1% of the state was Severe drought or worse.




Increased feeder cattle numbers at auction also indicated early weaning of calves and early marketings of summer grazing cattle, Peel said.  Calf prices dropped as these calves accelerated seasonal price pressure.  Calf prices recovered somewhat the last week of July, but large seasonal supplies of heavy feeder cattle likely will be augmented by the drought-forced cattle movement.

July’s rapidly advancing drought pushed Oklahoma auction volumes higher as more cows were culled, he said.  The July volume of slaughter cows and bulls was more than double last year in Oklahoma auctions.

The cull cow market was overwhelmed, and prices were sharply lower, Peel said.  In Oklahoma City, boning cow prices decreased from $89.51 per cwt the last week of June to an average of $66.70 the last two weeks of July.  Boning cow prices also were lower from Kansas south through Texas.

Cull cow prices generally decreased around the country in July with the sharpest decreases in the central and southern plains, Peel said.  However, in some markets, cull cow prices recovered slightly the last week of July.




Nationally, beef cow slaughter continued a double-digit pace in July, he said.  Beef cow slaughter through mid-July is up 14.1% for the year to date.  This means, year over year percentage increases in beef cow slaughter may be smaller in the second half, compared with increased slaughter last year.

However, beef cow slaughter would have to drop to a level less than 6% over last year for the remainder of the year for the annual slaughter to not be double-digit higher, Peel said.

Heifer slaughter is up 3.9% so far this year, he said.  The July 1 inventory of heifers in feedlots was up 2.9% over last year and confirms heifers continue to be diverted into feeder channels rather being retained for breeding.

The mid-year cattle inventory showed the beef cow herd was down 2.4% year over year and the inventory of beef replacement heifers was down 3.5% from last year, Peel said.




The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $135.00 to $142.13 per cwt, compared with last week’s range of $136.00 to $150.00.  FOB dressed steers, and heifers went for $214.80 to $217.25 per cwt, versus $213.91 to $219.67.

The USDA choice cutout Wednesday was down $0.52 per cwt at $267.94, while select was down $0.25 at $241.30.  The choice/select spread narrowed to $26.64 from $26.91 with 67 loads of fabricated product and 39 loads of trimmings and grinds sold into the spot market.

The USDA said basis bids for corn from feeders in the Southern Plains were steady at $2.60 to $2.70 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.10 over Sep, which settled at $5.91 1/2, up $0.00 1/4.

The CME Feeder Cattle Index for the seven days ended Tuesday was $174.04 per cwt down $0.36.  This compares with Wednesday’s Aug contract settlement of $179.35, up $1.22.