In the Cattle Markets: Cow Prices at Record Levels

US - Cull cow prices were record high in 2011 and are on pace to set another record high in 2012, writes Tim Petry, Livestock Economist at North Dakota State University Extension Service.
calendar icon 15 May 2012
clock icon 3 minute read

Prices for 85-90 per cent lean slaughter cows in the Southern Plains started 2012 at $70 per hundredweight (cwt.) and increased seasonally throughout January and February. Since late February, prices have traded in a fairly narrow trading range of $85 to $87/cwt., and have averaged about $10 higher than last year. High prices in 2011 were in spite of relatively large cow slaughter, particularly in the last half of the year. Beef cow slaughter in 2011 was 15% higher than the previous 5-year average, and was caused largely by severe, and in some cases record setting drought in the Southern Plains. But cow prices were buoyed by strong demand for manufacturing grade cow beef and lower beef imports.

Higher cow prices in 2012 are the result of lower cow slaughter and continued strong demand for 90 per cent lean boneless beef, despite the lean fine textured beef (LFTB) controversy and discovery of another US cow with BSE.

For the year, total cow slaughter has been down about 1.5 per cent. However, declines in recent weeks have been higher with April cow slaughter reported down 8.7 per cent. All the decline in cow slaughter has come from the beef cow sector, with beef cow slaughter down about 2.5 per cent for the year compared to dairy cow slaughter up almost one per cent. In April, beef cow slaughter was down 18.5 per cent with dairy cow slaughter up about three per cent.

Reduced cow slaughter for the rest of the year would be supportive to prices. What are the prospects for that?

Dairy cow slaughter may remain above last year’s levels for several months as increased milk production is pressuring prices. Beef cow slaughter levels will be dependent on rainfall in key cattle producing regions. US pasture and range conditions recently reported by USDA-NASS and compiled by LMIC indicated 17 per cent of pastures and ranges in poor and very poor condition compared to 24 per cent last year at this time and the five year average of 17.6 per cent.

The most improved region is the Southern Plains where 27.5 per cent of pasture and range was reported as poor and very poor compared to 63 per cent last year and a 5-year average of 24.4 per cent. By mid-summer last year, severe drought caused a 95 per cent poor and very poor rating in the Southern Plains. Both the Southeast and Western regions now have worse ratings than last year and conditions there will need to be watched closely.

The heavy beef cow culling that occurred the last several years, and stronger calf prices point to continued reduced beef cow slaughter as long as Mother Nature cooperates with adequate rainfall. Cow prices usually decline seasonally after mid-summer and that can be expected again this year. But the magnitude of the decline will certainly be impacted by cow slaughter levels.

The fed cattle market was down just slightly last week. 5-area fed steer prices on a liveweight basis averaged $120.38/cwt., down 23 cents for the week. Dressed weight prices declined 55 cents for the week to average $192.41. The wholesale beef market was also slightly lower last week with Choice boxed beef inching 29 cents lower to close at $190.37.

The Choice-Select spread continued to show seasonal strength by increasing $1.37 to $5.66. Compared to last week, feeder cattle and calf prices were mixed and affected by seasonally declining receipts and variation in quality at many markets. Corn prices in Omaha on Thursday dropped 20 cents per bushel from the previous week to close at $6.17, but distillers grain prices in Nebraska strengthened.

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.