It is still very profitable to cull cows.
By: Tim Petry, Livestock Economist, North Dakota State University Extension Service
Cull cow prices in the U.S. have been at record high levels throughout 2014. Seasonally peak prices occurred in March, with April prices averaging about $4 per hundredweight lower than March. Record high prices have been supported by lower cow slaughter, fewer beef imports in January and February, and good consumer demand for hamburger with record high retail beef and pork prices.
Total cow slaughter has averaged about 9.5% below last year with beef cow slaughter down about 9.4% (88,780 head) and dairy cow slaughter down about 9.6% (98,660 head). Beef cow slaughter during April has been down about 16% from last year. Declining beef cow slaughter is the result of better moisture conditions east of the Mississippi River and in some areas of the Northern Plains. Record high calf prices are also stimulating interest in retaining beef cows where moisture conditions allow it. Lower dairy cow slaughter is due both to higher milk prices and declining feed costs, which has improved profitability in the dairy sector.
Fresh, 90% lean wholesale boneless beef prices at about $250 per hundredweight are down from the $264 peak in March, but still higher than the $206 last year at this time. Demand for ground beef is expected to stay strong throughout the grilling season with other beef cuts and pork at record high levels. The National Restaurant Association recently released its restaurant Performance Index (RPI) which at 101.4 rose to a 10 month high in March. The stronger RPI was supported by stronger customer traffic and an optimistic outlook among restaurant operators.
Cull cow prices are likely to remain at record high levels but with late summer seasonal weakness occurring. Risk to cow prices would come from an expanding drought and forced liquidation in beef cow country. Both the Southern Plains and Southwest are very dry now.
USDA-NASS released the first U.S. pasture and range condition report on May 5. For the week ending May 4, 2014, 22% of pastures and ranges in the U.S. were rated as very poor or poor, compared to 36% with the same rating last year.