18 August 2010

5 minute read

North America

Cull Cow Marketing

Three factors should be considered when making the culling decision: (1) seasonality of cull cow prices, (2) price differences between slaughter grades and number of cows in each grade (their body condition score), and (3) cost of feeding cull cows.

Cull cow prices generally follow a consistent seasonal pattern. Prices normally are the lowest October through January and are the highest from April through August. If overall cattle prices are rising/declining sharply in a year, then this price pattern may not be as apparent. However, from 1980-2009 there was only one year when the price for cull cows was higher in November than it was in August. Prices for cull cows are based on their USDA carcase grade or their expected carcase grade. Price differences between these grades impact the price of cull cows. These price differentials vary from year to year and also from month to month within a year. The differential is wider in higher priced years and in the fourth quarter of the year. Average price differentials between market classes at Torrington, WY from 2005 - 2009 were Boner cows were 7.5 per cent higher than Lean cows and Breaker cows were 3.5 per cent higher than Boner cows. The Commercial grade or White Fat market class is frequently not reported. When it is, the price is typically 10 per cent higher than the Breaker prices at the same auction.

Depending upon the weight and frame of a cow, it requires about 60-80 lbs. of weight gain to increase one BCS. A cow with a BCS of 3 in the Lean Market Class would require about 140 lbs. of gain to get to a BCS of 5 and into the Boner Market Class. A cow with a BCS of 4 in the Lean Market Class would only require about 70 lbs. of gain to get to a BCS of 5 and into the Boner Market Class.

At different times of the year a cow may be gaining weight or losing weight based on the quantity and quality of the forage they are consuming. Considering the fact that many cows may be losing weight and BCS during the fall, they may be sliding from the Boner to the Lean market class. Furthermore, the seasonal price pattern is that prices are typically declining through the fall. Therefore, where possible culling earlier in the fall rather than later will likely result in a higher market price and more weight being sold.

If a producer culls a cow in the fall and wants to feed her to take advantage of seasonal price increases, what is the optimal rate of gain and how long should the cow be fed? The answer to these questions will depend upon the initial cow weight and BCS, the availability and cost of various feed sources and the current price of cull cows.

Let’s quickly look at three different rations: an alfalfa/grass hay ration with an average daily gain (ADG) of 1.25 lbs., an alfalfa hay-corn silage ration with an ADG of 2 lbs, and an alfalfa hay-corn grain ration with an ADG of 3 lbs. I will assume that the cows weigh 1050 lbs., have a BCS of 4, and the market price for Lean cows is $40/cwt. in November. Alfalfa is $90/ton, grass is $76.50/ton, corn silage is $33.75/ton, and corn grain is $3.75/bushel. The cows are fed for 90 days and sold in February. A cost of $0.30 per day is charged for yardage and interest on the value of the cull cow is also charged. The net return to feeding cows with these assumptions would be $27.49, $67.89, and $65.93 per head for the hay, silage, and corn grain rations respectively.

I encourage you to look at your own resources and evaluate carefully what options you have with your cull cows. Compared to the traditional culling and marketing in November, it is often the case that returns will be greater if the cows are culled in late summer/early fall or if they are fed for some time after culling.

The Markets

The fed cattle market was higher this past week. Trade took place mid week with very good volume. Prices were mostly $94 on a live weight basis and were $149-151 on a dressed basis. Choice boxed beef prices were almost $3 higher this week. The Choice-Select spread decreased slightly and remains at the typical level. Feeder cattle prices were mixed this past week compared to last week’s prices. Montana prices were $3 lower for 750 and $5 higher for 550 pound steers. Nebraska prices were $1 higher for 750 and $3 lower for 550 pound steers. Oklahoma prices were steady for 750 and $1 for 550 pound steers compared to last week. Corn prices were a $.02 lower per bushel than last week. Dried Distillers Grain prices were steady and wet distillers grains were priced a little higher in Nebraska for the week.