LMIC Sees Higher Cull Cow Prices

The Livestock Marketing Information Center said in a letter to Extension agents called the Livestock Monitor, that economists there expect a general year-over-year increase in cull cow prices for the balance of this year and throughout next year.

Expected increases in calf prices imply less pressure to cull cows across the country as a whole, especially if cull cow prices decline.




For the last full week of August, as reported by USDA’s Agricultural Marketing Service, the national price of live cull cows sold directly to packers was $57.65 per cwt, which was about $2.00 more than the same week in 2019, the LMIC said.  That was more than $15.00 per cwt less than the 2014-2018 average.

Prices in some areas of the US moved lower in August, the LMIC said.  For example, auctions in western Kansas began the month at $58.25 per cwt, and ended at $42.71.  This market strengthened week-over-week in early September to $50.87.




Supply and demand economic forces are at work in the cull cow market (as in any openly traded market), the LMIC said.  Seasonal price patterns show the lowest prices often come in the last two months of the calendar year when most US cow/calf operations cull cows.

Typically, US prices begin to erode quickly in late September and continue dropping throughout November, the LMIC said.  Within the seasonal cow slaughter pattern, it is essential to look for non-typical changes.

For beef cows, that usually is associated with long-term (multi-year) drought, the LMIC economists said.  Surges in dairy herd culling are driven by stressed milk producer margins.  For the next few months, dairy cow slaughter levels could rise if milk prices collapse.

And dramatic year-over-year seasonal slaughter increases tend to lower cull cow prices (if harvest decreases, prices rise), the LMIC said.




Besides cull cow supplies influencing the market, there are more dimensions to consider, the LMIC said.  First are beef imports, especially from areas like Australia and South America, which sell lots of lean beef from non-fed animals like cows, bulls and grass-fed steers and heifers.

In recent years, drought in Australia has caused large US beef imports, the economists said.  But, the situation has improved.

With the large US cow slaughter levels of recent years, there has been a lack of harvest capacity, especially in some regions of the US, the LMIC said.  This will become a less critical factor depressing prices if culling rates begin to subside as expected.

Finally, the LMIC is forecasting some strength in fed cattle prices, which tends to be supportive of cull cow prices, too.

The LMIC’s forecast for strength in the fed cattle market isn’t without its supporters.  Live cattle futures traders seem to agree.  Settling prices for each delivery month through Apr 2021 are stair-stepped higher.




Fed cattle trading this week was reported in the Plains at $101 to $102 per cwt on a live basis, down $1 to $2 from last week.  Dressed-basis trading was seen at $160 to $161 per cwt, down $2 to $3.

The USDA choice cutout Thursday was down $2.12 per cwt at $220.83, while select was off $0.19 at $207.32.  The choice/select spread narrowed to $13.51 from $15.44 with 151 loads of fabricated product and 47 loads of trimmings and grinds sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was at $141.10 per cwt, up $0.12.  This compares with Thursday’s Sep contract settlement of $139.17 per cwt, up $0.77.