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Cull Cow Prices Strong

13 May 2014
LMIC

US - Cull cow prices in the US have been at record high levels throughout 2014, according to a North Dakota State Extension Economist.

Lower cow slaughter and fewer beef imports in January and February have supported prices, which peaked in March, said Tim Petry, Livestock Economist.

Higher pork prices and good strong hamburger demand has also helped a $264 per hundredweight peak in March before April prices averaged $4/cwt less the following month. 

Total cow slaughter has averaged about 9.5 per cent below last year with beef cow slaughter down about 9.4 per cent (88,780 head) and dairy cow slaughter down about 9.6 per cent (98,660 head). Beef cow slaughter during April has been down about 16 per cent 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 per cent 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 per cent of pastures and ranges in the U.S. were rated as very poor or poor, compared to 36 per cent with the same rating last year.

The Markets

The fed cattle market strengthened last week, but was still within the trading range that has occurred the last month. In the 5-area market, liveweight steers averaged $147.98 per hundredweight up $1.64 for the week.

Dressed weight prices increased $2.64 to average $237.72 for the week. The boxed beef market was stronger early in the week but faded by week’s end.

Choice boxed beef prices averaged $231.87 down 4 cents for the week. Both calf and feeder cattle prices strengthened on lighter receipts, with most strength coming later in the week as both feeder cattle and live cattle futures reached new contract highs and corn futures prices declined.

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