Slaughter Cow Considerations for Fall 2013 Source: Ross Pruitt, Department of Agricultural Economics and Agribusiness LSU AgCenter
In a normal year, slaughter cow prices typically are lowest in the fall and highest in the spring. The seasonal price increase from the fall into the spring normally allows for producers to capture an additional gain in price per hundredweight for slaughter cows as well as the additional weight that can be added to the cow following weaning of the calf. While the seasonal increase from fall to spring in slaughter cow prices will likely occur early next year, it might not be as strong as history would suggest.
Starting in mid-March, weekly beef cow slaughter was higher than year ago levels and continued until early July. Aggregate beef cow slaughter was higher than a year ago from early May through the end of August. This put counter-seasonal pressure on slaughter cow prices at a time when they should have been reaching their yearly highs. In the last few weeks, slaughter cow prices in the Southern Plains have reached a yearly high ahead of the fall when the supply of slaughter cows is greatest.
Given the intensity of culling seen earlier in the year, slaughter cow prices may not experience as much of a seasonal decline this fall as expected. Since 1990, approximately 9.6% of the beginning inventory of U.S. beef cows are culled during the year compared to 10% for the past 10 years. Through the end of August, 7.2% of the beginning inventory of 29.3 million beef cows had been culled which is even with the five year average, but below the 7.8% of 2011. While total beef cow slaughter for 2013 will be lower than last year, there are strong indications that approximately 10.5% of the nation’s beef cows will be culled this year.
As with the calf and feeder cattle markets, there are some regional variations in how much of a run-up slaughter cow prices experience each year. Variations in prices are also present depending on how the female is classified. Looking at prices from Georgia, Oklahoma City, and the Southern Plains from the past five years indicated an average seasonal price increase of 30%. This past year experienced only a 10% increase, on average, across these markets from last fall to this spring.
Estimated costs to establish winter ryegrass pastures for this year are $121/acre for a prepared seedbed and about $15/acre cheaper for sod-seeded pastures. Should a smaller than normal seasonal price increase occur from fall to spring, producers may have a hard time recouping winter pasture costs depending on the stocking rate and how much weight is added to the cows during the winter grazing period. While pasture and range conditions are much improved over a year ago, they have weakened over the past few weeks. What that does to beef cow slaughter will impact retention decisions and its impact on slaughter cows prices through the end of this year and into early next year remains to be seen.