by: Wes Ishmael

Pity the cull cow. Her becoming one always signifies a failure of sorts, never a victory.

That could be one reason culls are often viewed as a byproduct of production management rather than a financial asset that can be exploited or sacrificed.

Depending on who's running the abacus, cull cows typically represent 10-20 percent of a cow-calf operation's annual gross revenue. As cattle prices have risen over time, so have the prices of cull cows and bulls.

In fact, Tim Petry, Livestock Marketing Economist at North Dakota State University (NDSU) notes that cull cow prices last year were record high, despite the fact that beef cow slaughter was up significantly.

At least part of that has to do with the global economic recession. As per capita income has declined, consumers have spent more for end meats and trim than for middle meats. That's still true today, although Petry points out through June of this year cull cow prices averaged about $5/cwt. less than last year. As of mid-July cull cow prices had increased to last year's levels.

Among the reasons for the decline, Petry explains, "Although beef cow slaughter has been lower, total cow slaughter has averaged about three percent higher than in 2008."

Black and White Exodus

You're likely aware of the dairy herd retirement program undertaken by Cooperatives Working Together (CWT). Managed by the National Milk Producer's Federation (NMPF), the self-help program is aimed at reducing milk supplies in order to stabilize milk prices. The program is funded by dairy cooperatives and individual dairy farmers, who are contributing $0.10/cwt. on their milk production through December 2010.

On July 2 CWT announced the first of three dairy herd retirement programs scheduled for this year had removed 101,040 dairy cows - mostly from the western part of the nation - and almost two billion pounds of annual milk production from the national inventory.

Just a few days later, CWT announced the second retirement program.

"Carrying out a second herd retirement right on the heels of the largest-ever herd retirement should give us a double-barreled attack on milk production in a very short period of time, resulting in a farm level price recovery several months sooner than would otherwise occur," explained Jerry Kozak, NMPF President and CEO.

There's no word on how many cows CWT is looking to cull from the herd during this new round of herd retirement. When CWT first announced its plans for 2009, Jim Tillison, CWT Chief Operating Officer said, "Given the economic stresses on the farm today, we anticipate CWT will remove a significant number of dairy animals, but that depends on our members and the level of the bids submitted, given current cow prices." As with other herd retirement rounds in recent years, he explained CWT had no set target for the volume of milk or the number of cows to be removed.

Early projections from beef industry analysts suggested CWT would be looking to clear 250,000-300,000 cows from the herd this year.

So far, reduced beef cow slaughter on a year-to-year basis has helped negate price pressure from the increased harvest of dairy cows.

For perspective, according to the Livestock Marketing Information Center (LMIC), total federally inspected cow slaughter was approximately three percent higher than last year on a weekly basis through the middle of June, though 16 percent higher than the five-year average. Beef cow slaughter was down about six percent compared to last year, while dairy cow slaughter was up 15 percent (20 percent more than the five-year average).

Likewise, USDA's recent mid-year cattle inventory report indicates the beef cow inventory is one percent less than last year (32.2 million), while the inventory of dairy cows is two percent less than the previous year (9.2 million head).

The inventory of all cows and calves on inventory is 101.8 million, one percent less than a year earlier.

Looking ahead, keep in mind that the mid-year inventory report also says the number of beef heifers retained for replacement this year is two percent less than a year ago, while the number of dairy heifers retained for replacement is unchanged from a year ago.

Atypical seasonal cull cow prices are also due to beef cows, though.

"Cow prices did decline contra-seasonally about $6 per hundredweight in May during the early stages of the buyout. But the lower prices were not entirely due to the additional dairy cow sales," Petry says. He explains there was additional beef cow slaughter during that time frame as Northern Plains producers liquidated cows that lost calves in last year's blizzards.


Beat the Rush

"Although prices in mid- July were similar to last year's levels, cow prices likely will not increase to the high levels reached last August," Petry says. "Instead, prices likely will level off for the rest of the summer. The typical seasonal price pattern for cows shows a sharp decline in October and November, when heavy beef cow culling occurs. That scenario likely is to occur again this year."

That's one reason identifying and getting rid of culls sooner than later always pays dividends.

Just consider the heifers.

"Lifetime cow studies from Montana indicate that properly developed heifers that were exposed to fertile bulls, but did not become pregnant were often sub-fertile compared to the heifers that did conceive," explains Glenn Selk, extension reproduction specialist at Oklahoma State University (OSU).

In a recent issue of OSU's Cow-Calf Corner, Selk explains, "In fact, when the heifers that failed to breed in the first breeding season were followed throughout their lifetimes, they averaged a 55 percent yearly calf crop. Despite the fact that reproduction is not a highly heritable trait, it also makes sense to remove this genetic material from the herd so as to not proliferate females that are difficult to get bred."

With that in mind, Selk recommends preg-checking replacement heifers about 60 days after bulls are removed.

Obviously, fewer days spent feeding money down the proverbial rat hole with open cows and heifers makes sense, too. And that's before you consider lost marketing opportunities associated with age.

"The grand total expense for not culling open replacement heifers in today's market is about $285 per head," Selk explains. "Therefore, it is imperative to send heifers to the market or the feedlot while they are young enough to be fed for four to five months and not be near the B-maturity age group (carcasses estimated to be 30 months of age or older). Feedlot order buyers will be especially leery of heifers that may be near 20 months of age, because of the risk of B-maturity beef that receives a considerable discount when harvested at the packing plant or because of the potential loss of the Japanese market."

Back to the seasonality of cull cow prices, though. In 28 out of 28 years, according to Cattle-Fax, folks made an average of $54 per head buying cull cows in November (when prices hit bottom) and putting 1.5 lbs. average daily gain on them and then marketing them in February (when prices are significantly higher, seasonally).

Bottom line, Petry says, "If possible, marketing cows before October or after December usually is a prudent marketing strategy. That very well could be the case again this year."


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