Cull Cow Prices at the Highs for Now?
Most producers would agree that beef cull cow prices have hit an acceptable high compared to previous years. Lean Cows (85 – 90%) on the Weekly Montana Auction Report ranged in price from $0.90 to $104.23 per pound. These higher prices are not surprising as the market continues to feel the downstream impacts of reduced cow numbers in the area due to drought. But these prices will face headwinds from dairy culling that’s getting more active.
For the week ending July 22, USDA reported dairy cow slaughter at 61,200 head throughout the US, up 10% year-over-year and above the five-year maximum for the week. Lower milk prices and tighter farm margins have producers increasing culling. Why does this matter to beef cows? The reality is that dairy culling matters more if your buyer sends your cull cows to a plant that processes both beef and dairy cattle. Locations like Montana, Idaho and Utah have a higher risk that their beef cull cow market could see lower prices because of dairy culling.
August live cattle finished the week $2.75 higher at $180.90 per hundredweight, with August feeders $3.925 higher at $249.525. Although feeders were unable to test the contract high of $251.30 per hundredweight, they did manage to finish the week with a new contract high close, capitalizing on the capitulating grain prices. Corn futures finished in the green on Friday after eight consecutive lower closes. Even so, nearby futures finished at $4.8425 per bushel, down 7% on the week. Feeders finished the week strong, but we would have liked to have seen a close over $250 per hundredweight. The previous historical high of $245.20 per hundredweight from 2014 is technical support for August feeders and resistance stands at $250.00 per hundredweight. We believe feeder futures will continue to be largely dictated by the trade in grain futures. Live cattle found support from a firm tone in cash for market ready cattle. Technical support in August live cattle stands at $178.00 per hundredweight and resistance at $18.001 per hundredweight.