Contemplating the Cull Cow Market
The cull cow market can be a valuable revenue source for cow-calf producers. Revenues earned from cull cow sales can comprise anywhere from 10 to 30 percent of an operation’s sales. Given this importance, it is not surprising that the cull cow market and factors producers should be watching in the market were discussed earlier this year during the Nebraska Farm Bureau Young Farmers & Ranchers Conference. The topic is particularly timely given higher cull cow prices, reduced beef cow herd size, and higher cow slaughter rate seen over the past year.
Figure 1. National Cutter Cow Prices ($/cwt.)
Source: Daily Livestock Report, Steiner Consulting Group, DLR Division, Inc. Vol. 21, No. 60, March 29, 2023.
Livestock economists note several demand and supply factors influence the cull cow market. On the demand side, consumer demand for ground beef and other beef cuts plays a role. The greater consumer demand, the more support for cull cow prices. Elliott Dennis, livestock economist at the University of Nebraska, says beef cuts from cull cows are used in food service outlets which offer value steaks and other beef dishes. On the supply side, the number of cull cows, bulls, and dairy cows entering the market, imports of beef trimmings, and the supply of trimmings produced from steer/heifer slaughter all come into play. There is also a seasonal nature to the cull cow market. Prices typically hit seasonal highs in July when there is strong demand for ground beef and fewer cows coming to market. Lows are reached in November when spring-calving cows hit the market following weaning and pregnancy check (Figure 1).
The Daily Livestock Report (DLR) reported that through the first quarter of this year cull cow prices have continued to build on the already high levels seen coming into the year. Prices have been roughly 15 percent above a year ago. One reason could be fewer beef cows going to slaughter (Figure 2). DLR reported national beef cow slaughter was down more than 10 percent in March. Josh Maples, an economist with Mississippi State University, attributes the lower slaughter numbers to improved drought conditions in parts of the U.S. He also suggests producer optimism with calf prices might also be contributing to fewer cows going to market. Also, consumer demand for beef continues to hold strong supporting cull cow prices.
Moving forward, demand for trimmings for ground beef seems to be remaining steady. DLR indicated fresh 90% lean beef prices have increased with the rise in cull cow prices. The ongoing drought also bears watching. If the drought weakens, and the prices for feedstuffs moderate, fewer cows will go to slaughter which should help support cull cow prices. Also, higher calf prices might encourage cow-calf producers to begin to rebuild their herds, another supportive influence for prices.
Figure 2. Beef Cow Slaughter (1,000 head)
Source: Daily Livestock Report, Steiner Consulting Group, DLR Division, Inc. Vol. 21, No. 60, March 29,2023.