"If herd expansion plans move forward on adequate or better forage conditions, cull cow prices will likely stay above $90/cwt. for the remainder of the year and average in the mid $90s or higher,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.
“Weekly federally inspected cow slaughter appears to be declining rapidly after
remaining high relative to Jan. 1 inventories for many months,” say analysts with USDA’s Economic Research Service (ERS) in the March Livestock, Dairy and Poultry Outlook. “While also a seasonal pattern, the decline is likely exacerbated by both low cow inventories and the desire to maintain or increase cow inventories. In response, weekly cow prices have moved sharply higher since the beginning of 2014.”
Earlier this week, Derrell Peel, Oklahoma State University Extension livestock marketing specialist, explained in his weekly market comments that cull cow prices typically advance 19% on average from lows in November to a peak in May.
“Slaughter cow prices in January averaged $89.06/cwt. (OKC), close to the average seasonal increase of nearly 6% over November prices,” Peel says. “February cull cow prices averaged $97.19, slightly more than seasonal increase of nearly 15% over the November price. March appears to be continuing the uptrend with current prices already well above seasonally projected price levels for March compared to November.”
Cow slaughter is down 10.6%, year-to-date, with dairy cow slaughter down nearly 12% and beef cow slaughter down more than 9%, Peel says. While expectations are for dairy cow slaughter to moderate, he says beef cow slaughter could be 10-15% lower for the year if forage enables herd expansion. That will further support cull cow prices.
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"There have been times in the past when a stronger than expected fall cow price is offset by a weaker than expected seasonal price increase into the following spring. Such is not the case this year with cull cow prices increasing at or above seasonal levels so far in 2014,” Peel says. “The early March prices already exceed the projected seasonal peak for May based on the November price level. Cull cow prices may stay at $100/cwt. or higher thorough the normal May peak before dropping slightly this summer. If herd expansion plans move forward on adequate or better forage conditions, cull cow prices will likely stay above $90/cwt. for the remainder of the year and average in the mid $90s or higher.”
Moreover, Peel says both supply and demand are supporting cull cow prices.
“Wholesale cow boxed beef prices have increased 14% since the beginning of the year largely on ground beef demand,” Peel explains. “Wholesale 90% lean boneless beef trimmings prices have jumped 17% since Jan. 1.”
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