Even though dairy cow slaughter popped during the last two weeks of data, dairy cow culling continues well below last year, boosting cull cow prices, said David Anderson, livestock and food product marketing specialist at Texas A&M University.
Writing in the Livestock Marketing Information Center’s In The Cattle Markets, Anderson also said, reduced dairy cow culling is likely to continue for the rest of the year, even though culling may increase seasonally.
“It’s normal for dairy cow slaughter to climb seasonally after early July,” he said. “Overall, reduced dairy cow culling is coinciding with low beef (cow) culling and is further boosting prices.”
DAIRY COW CULLING DOWN 18%
Over the last EIGHT weeks, dairy cow culling was 18% smaller than the same period last year, Anderson said. Over the last eight weeks, the Midwest and New York regions reported slaughter that was 15% and 16% less than the same period last year.
Dairy cow slaughter in Virginia and Pennsylvania along with the Southeastern states were down 10% and 8%, respectively, he said. Culling in the Western regions indicated slightly slower slaughter than the national rate.
Slaughter in Texas, Arkansas and Louisiana was down 32%, Anderson said. Regional differences in slaughter rates continue to indicate shifts in regional milk production with faster than average culling rates in the South, Northern Plains, and Midwest but, slower culling in the Southern Plains.
Conversely, Colorado and the Dakotas reported larger dairy cow slaughter this year than last year and was the only region to do so, he said.
DAIRY CULLING TO REMAIN LOW
Dairy cow culling likely will remain relatively low in coming months because of smaller herds, relatively few replacement heifers and rising milk prices, Anderson said.
Reduced dairy cow culling coinciding with reduced beef cow slaughter is cutting supplies of lean beef, he said. Wholesale boneless 90% lean beef hit a new high of $3.76 a pound last week.
The cow-beef cutout is in record territory at over $290 per cwt, he said. Lean slaughter cows at auction continue around $125 per cwt.
The lack of dairy replacements and the need for replacements by some have bred dairy cow and heifer prices up from $300 to $600 per head in dairy auctions around the country, Anderson said.
The lack of culling is putting additional strain on cow packing plants, which is likely to worsen in coming months even if culling increases seasonally later in the year.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $186.50 per cwt to $195.43, compared with last week’s range of $186.43 to $197.25 per cwt. FOB dressed steers, and heifers went for $294.90 per cwt to $303.53, compared with $295.76 to $308.46.
The USDA choice cutout Thursday was up $2.06 per cwt at $316.94 while select was up $1.53 at $302.03. The choice/select spread widened to $14.91 from $14.38 with 96 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $374.52 per cwt, and 50% beef was $176.10.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.50 to $1.60 a bushel over the Sep corn contract, which settled at $3.75 a bushel, down $0.06.
No live cattle contracts were tendered for delivery Thursday.
The CME Feeder Cattle Index for the seven days ended Wednesday was $246.34 per cwt, up $1.02. This compares with Thursday’s Aug contract settlement of $246.72, down $1.17.