Cull cow prices are rising seasonally but remain below last year and the 2013-2017 average and are likely to follow seasonal patterns more closely in 2019, said Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel, in a newsletter to Extension agents.
Peel projected cow slaughter would decline about 1.5% this year, moderating cow beef supplies. Modest slaughter increases may show up in beef and dairy sectors.
Total beef production was projected to increase 1.5% to 1.8% in 2019 so overall beef supplies will remain large, but the cow beef market will moderate faster as herd inventories likely will peak, he said.
Current indications suggest 2019 cull cow prices may hold close to steady on an annual average basis with a chance of slightly higher prices year over year, especially in the last part of the year.
BONING COW PRICES RISING
The latest Oklahoma boning cow prices averaged $59.50 per cwt, up from $58 the previous week. Prices have risen for four straight weeks since mid-January.
The increases were as expected seasonally as cull cow prices typically rise sharply from January into February on the way to seasonal peaks in May.
Cull cow prices typically achieve the bulk of their seasonal price increase by March and hold near flat through August before declining to fall lows.
SEASONALS NOT ALWAYS ACCURATE
Though seasonal price patterns are among the strongest tendencies of cattle markets, they do not always follow exactly, Peel said.
Cull cow prices in 2018 did not follow seasonal patterns for most of the year. After rising seasonally from January to March’s peak at $67.59 per cwt, prices weakened, declining to an average $58.99 for the May-to-September period.
Boning cows dropped further in seasonal fashion with the lowest prices occurring in early December averaging $47.88 per cwt — the lowest Oklahoma monthly boning cow prices since late 2009.
Oklahoma boning cow prices averaged $58.58 per cwt in 2018, down 10.2% from 2017.
2018 SUPPLIES PRESSURE PRICES
Cull prices were pressured last year mostly by larger cow beef supplies from herd expansion in recent years, Peel said. From record low beef cow culling rates in 2015, beef cow slaughter has risen as herd inventories grew and culling returned to normal rates.
In 2018, dairy cow slaughter was higher than expected because of dismal dairy market conditions. As a result, 2018 total cow slaughter was 6.2 million head, up 1.0 million, or 20%, above the 2015 low of 5.2 million.
In addition to significantly larger cow beef supplies, there may also be some demand weakness in the processing beef market as ground beef competes with record large pork and poultry supplies.
CATTLE, BEEF RECAP
No fed cattle sold Wednesday on the Fed Cattle Video Exchange, compared with 161 a week earlier at $124 to $124.50 per cwt.
Cash cattle trading last week took place at mostly $125 up to $126 per cwt, up $1 from the previous week. On a dressed basis, cattle traded from $198 to mostly $199 to $200, steady to up $2.
The USDA choice cutout Friday was up $0.78 per cwt at $216.85, while select was up $0.58 at $210.99. The choice/select spread widened to $5.86 from $5.66 with 69 loads of fabricated product sold into the spot market.
There were no fresh delivery notices Friday.
The CME Feeder Cattle index for the seven days ended Thursday, was $141.31 per cwt, down $0.19. This compares with Friday’s Mar contract settlement of $142.60, down $1.47.