Beef-on-dairy remains among the most discussed topics in the beef industry, according to a Livestock Marketing Information Center article called In The Cattle Markets.
A question that has arisen lately is whether growth in beef-on-dairy has the potential to mask changes in cattle inventories in USDA National Agricultural Statistics Service reports. Specifically, the January and July Cattle Inventory reports and the monthly and quarterly Cattle on Feed report.
BEEF ON DAIRY COULD BE A FACTOR
The growth in beef-on-dairy programs may increase the number of cattle entering the beef supply and change the composition of those cattle, the LMIC article said.
Beef-on-dairy can affect beef supplies in two ways: the total number of cattle entering the beef supply and the composition of cattle in the US beef supply, the LMIC said. First, beef-on-dairy may change the number of cattle entering the beef supply chain by altering the relative value of dairy heifers.
Historically, dairy heifers are valued highest as dairy cow replacements, the LMIC said. Excess heifers entered the beef supply chain, but growth in beef-on-dairy programs can increase the value of dairy heifers and bull calves as part of the beef supply chain.
That could influence dairy heifer retention decisions and affect the share of dairy heifers retained for herd replacement each year, the LMIC said.
Second, beef-on-dairy alters the composition of cattle by shifting dairy-origin calves that would traditionally enter the system as straight-bred dairy steers and heifers into a distinct beef-on-dairy category, the LMIC said. This effectively creates a third class of animal in the beef production system alongside traditional straight-beef breed and straight-dairy cattle breed. It still might be argued that these simply are another cross bred type of cattle.
THE DATA SUPPORT THE THEORY
From 2017 to 2026 the dairy cow herd has ranged from 9.34 million to 9.57 million head, the LMIC said. At the same time, the ratio of dairy replacement heifers to dairy cows has declined from 50.7% in 2017 to 40.8% in 2026.
While the dairy herd has been relatively stable during that time, the pool of heifers being held for dairy replacement has been shrinking, the LMIC said. While some of this is likely from producers more efficiently targeting heifer semen to the right cows, some also may be because the potential value of those non-replacement dairy calves, many of which are now beef sired.
The proliferation of information for better decision making on dairies has led to fine tuning the number of replacement heifers needed, especially given the cost of heifer development, and freeing up more beef sired calves for the record high calf market, the LMIC said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $260.70 per cwt to $261.86, compared with last week’s range of $258.00 to $264.00 per cwt. FOB dressed steers and heifers went for $411.24 per cwt to $411.43, compared with $404.17 to $414.25.
The USDA choice cutout Tuesday was up $2.63 per cwt at $392.90 while select was down $5.30 at $390.30. The choice/select spread narrowed to $2.60, from $5.27 with 55 loads of fabricated product and 12 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $460.71 per cwt, and 50% beef was $181.54.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.12 to $1.20 a bushel over the Jul corn contract, which settled at $4.57 1/4 a bushel, down $0.00 1/4.
The CME Feeder Cattle Index for the seven days ended Monday was $371.49 per cwt, up $1.36. This compares with Friday’s Aug contract settlement of $349.45, down $0.40.