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Cull Cows

Written by Dennis Sun

For those in the cattle business, this year has proven to be in a downward trend. Calves have jumped up and down a little, but lately, prices have just been headed south. The feeder futures have been in the red since before the Labor Day weekend.

I try to be somewhat positive in this column, but for the cattle producer, prices just keep falling. Maybe if I write on them, the cattle market will show me wrong and head up. I’m one of the last people you want to ask what the cattle markets are going to do. I rely on the smart ones out there and those who make a living by forecasting the markets.

Most ranchers have their calves sold or plan on taking them to the auction barn. Yearlings are being moved off the ranch, and the Labor Day weekend sales are behind us, so most everything is planned except for the cull cows.

Cull bulls this week are mostly bringing from 90 cents up to around $1.15, and cull cows are bringing from 70 cents up to around 81 cents – no record prices there. Dairy cows can affect the market, but year in and out, they seem to be pretty consistent through the year. We haven’t seen any dairy buyouts for some time, and thank God for that. But this year, with falling milk prices, there could be more selling than usual.

Recently, I read a column on cull cow prices by Jessica Sampson, agricultural economist with the Livestock Marketing Information Center, that I thought was good. She started out by telling us something most of the cattle producers know – the product of cull cow slaughter is hamburger, mostly 90 percent lean, which is then blended with 50 percent lean trimmings from fed steer and heifers to produce varying degrees of lean-to-fat hamburger and ground beef mixes. Again, thank God for hamburger and how poplar it is.

We all know the cull cow market really dropped off in August of 2015, as did all cattle markets, and for the first half of 2016, cull cow slaughter tracked eight percent above the first half of 2015. Sampson went on to say that for 2016, year-over-year increase was generally expected, if nothing else for the fact that older cows held back an extra year will only have a certain number of calves left in them. She said, another way to put it is, so far this year the cattle industry has returned to a more normal “culling rate.”

From 2008-13, the years surrounding the drought and cattle liquidation, the annual cow cull rate was between 10 percent and 12 percent of the Jan. 1 national beef cow count. In 2014, that cull rate was nine percent, and in 2015, it was eight percent. Sampson says that, historically, beef cow slaughter increases about four percent in the second half of the year, so using this simple average, beef cow slaughter in 2016 can be expected to total around 10 percent above 2015, to 2.5 million head. That would calculate to an 8.5 percent culling rate for 2016.

She says, due to the increased supply of cull cows on the market, lower cull cow prices are expected, but good signs appear as Australia isn’t importing beef into America as much and we have lower hay prices at home. There is a strong possibility of higher prices before and after October.

So, shake the dice.