Cull Cows: Profit Center or Economic Drain

December 17, 2013 09:48 AM
Cull Cows: Profit Center or Economic Drain

By: Heather Gessner, Livestock Business Management Field Specialist, SDSU Extension 

Every best management practices book related to beef cattle production calls for pregnancy checking the herd to identify open cows as early in the season as possible.
Open cows in the herd have a negative impact on profit as they are consuming expensive inputs (feed, AUM’s, and labor) without contributing back to the operation. The reasons cows do not breed back are many and varied and something cattle producers need to be monitoring.

Many times cows are not identified as open until late fall/early winter as this is when cows are typically brought in off summer grazing areas and calves are weaned. A downside with this plan is that most other cattle producers are working on the same time table, and thus many open cows hit the market at the same time, resulting in a seasonal price decline during the fall.

Is there a better option?
The national average cutter cow price ranged from $77-78/cwt for the first three quarters of 2013, with projections for the fourth quarter at $78-80/cwt and for the first quarter of 2014 at $79-83/cwt (Livestock, Dairy and Poultry Outlook-November 2013).
This increase in price projections may be an indicator for producers to hold on to open cows until after the first of the new year.

Some reasons to consider this option include:

  • The potential to add weight to an animal that may have come off grass in poor body condition. Adding pounds will increase the total weight available for sale and will also increase the white fat on the carcass.
  • Current signs are pointing towards a decline in cow slaughter numbers and the number of heifers destined for feedlots. With fewer cows and heifers entering the supply chain, beef production will be reduced. Supplies of lean ground beef used in many processing plants will face the biggest shortage as cow slaughter numbers decline. This shortage of supply will pressure prices to remain at or above current levels.
  • Young cows that are open are candidates to be re-exposed for fall calves. Bred female prices have increased in the last few months. Marketing a group of young cows bred for fall calves may well be a profitable venture.

Both adding weight and increased value are ways to bring additional profit to the operation. However, added weight and days on feed are not free. If you have a relatively inexpensive feed resource available (corn stalk grazing, low test weight corn, low cost forages, etc.) there may be opportunity for increased profits.

Consider the following three options for a 1200 pound open cow: Option A- sold in November, Option B-fed for 70 days, gaining roughly 2 pounds per day and Option C-fed for 70 days gaining 3 pounds per day. The feeding period is November 15th to February 1st,. Prices are based on third quarter projections of $79.00/cwt and first quarter projections averaging $81.00/cwt.

While there is added profit potential for feeding cull cows, the margin is tight and even small increases in feed costs or decreases in the market price will reduce that profit potential. Because there are no price risk management tools available for cows, completing an enterprise budget is the best tool to analyze the profit potential.

Additional considerations:
Current feed supply inventory must be taken into consideration. Feedstuff needs for the remaining cow herd should be analyzed carefully to ensure the main herd can be appropriately fed throughout the winter and spring. If feed inventories are not large enough to get through extreme cold snaps or an extended spring feeding period from a delayed spring turnout, selling open cows may be a better option, unless the added return from retaining the cows is sufficient to make up for any feed shortage.

Producers who are optimistic about heifer retention and herd expansion/rebuilding will want to watch the cow market closely to analyze how much beef production changes during the fourth quarter 2013. Timing cull cow marketing decisions based on the seasonal cull cows prices and the potential for cull cow price increases after analyzing feed rations and costs could add profits this year.


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