25 July 2013

3 minute read

Cow prices, while historically strong, have been below last year's record high levels for much of 2013. There are several reasons for the lower prices, writes Mr Petry.

Total cow slaughter was up 3.4 per cent in the first half of 2013 compared to the previous year.

In 2012, the meat industry was utilizing less trim from slaughter steers and heifers due to the lean fine textured beef media event. So, prices for 90 per cent lean wholesale boneless beef from cows were record high in the first half of 2012. Higher beef imports in the first part of 2013 from drought impacted New Zealand also tempered cow prices.

So far this year beef cow slaughter was up just under 3.4 per cent while dairy cow slaughter was up over 3.4 per cent . Beef cow slaughter actually declined about 10 per cent in January and February but then increased about 12 per cent compared to last year since then.

The lingering drought in the Western U.S., above average calving losses due to severe spring snow storms in the Northern Plains, and record high hay prices likely contributed to the higher beef cow slaughter.

Dairy cow slaughter has been above last year's levels for most of 2013. High feed costs and the closing of a Canadian cow slaughter plan have contributed to the higher slaughter. Through June 22, imports of cows from Canada totaled 147,785 head compared to 72,374 for the same period last year.

Through April, U.S. beef imports were 3.4 per cent above 2012 due to a 35 per cent increase in shipments of beef from drought impacted New Zealand. Australia is usually the leading beef supplier, but New Zealand is leading the way in 2013. Beef imports from all other countries including Australia were actually down 6 per cent with Australian imports down almost 10 per cent .

Rains in New Zealand in late April and into May reduced dairy herd liquidation and beef exports there. May beef imports from New Zealand fell below last year and lead to total beef imports from all countries through May at 1 per cent below 2012.

Cow prices in the second half of 2013 will continue to be impacted by weather and its effect on pasture and range conditions and hay supplies and prices. Moisture conditions are much better than last year in the Eastern half of the U.S., but the West remains very dry.

For the week ending July 6, 49 per cent of U.S. pastures and ranges were rated good and excellent compared to just 21 per cent last year. Twenty seven percent of pastures and ranges were poor and very poor compared to 50 per cent last year.

USDA-NASS reported average U.S. alfalfa hay prices for June at $220 per ton, down from $221 in May but up from the $201 last year in June. Other hay prices for June were reported at $147, down from $154 in May and $162 in April but higher than the $133 in June 2012. Other hay in June ranged from a low price of $84/ton in North Dakota to a high of $230 in both Colorado and Washington.

If Mother Nature cooperates, the potential for both lower cow slaughter and beef imports in the second half of 2013 exists. That could support cow prices at higher levels than last year. However, an expansion of drought and continued high cow slaughter and high hay prices would pressure prices.

TheCattleSite News Desk