Amid the run to record high calf prices in recent weeks, the cow market is higher too. Cow prices are higher on tighter supplies of cows and beef as we get closer to grilling season (it’s always grilling season for most of us down here).
Since the beginning of the year, total cow slaughter is about 9.4 percent lower than last year. Beef cow and dairy cow slaughter are lower than a year ago. Dairy cow slaughter tends to be its highest early in the year before declining in Summer. Beef cow slaughter is pretty close to the 5-year average. You’ll notice in the attached charts that beef cow slaughter tends to pick up mid-year before hitting its peak in Fall.
Cull cow prices tend to increase seasonally into late Spring and early Summer. Auction prices have shown a lot of volatility bouncing between $85 and $105 per cwt over the last 4 weeks. National average direct cutter quality cows have continued higher hitting $104.53 per cwt last week. The boxed cow beef cutout has increased from $205 in January to $246 last week.
More impressive than the increase in cull cow prices is the increase in lean beef prices for ground beef. The 90 percent lean boneless beef wholesale price has increased from $255 to $317 per cwt so far this year. A real contrast has developed between the 90 percent lean and the 50 percent lean price. Fifty percent lean prices are about 20 percent, about $26 per cwt, lower than last year. The contrast really highlights the tight supply situation in the cow and cow-beef market and the fed cattle market. Heavier weights are likely contributing to some relatively higher supplies of 50 percent lean beef. We seem to have plenty of fat to go with not enough lean.
What to Watch For
Cull cow prices should continue to increase seasonally over the next couple of months. Cull cow prices will look attractive compared to future calf prices from her offspring. Once grilling season gets a little closer, watch for increasing middle meat (steak) prices. High lean beef wholesale prices and tight supplies will continue to boost beef imports. We’ll begin to hear more about cow plants struggling to find supplies and going further and further out to buy cows and boosting bids more. Even more stress will be put on fast food restaurant chains selling hamburgers and pressure on ground beef prices at grocery stores.
A Note on This Friday’s Cattle on Feed Report
USDA will release its latest cattle on feed report on Friday afternoon. Watch for placements higher than a year ago. We are likely to see a rare event where February placements are larger than January’s placements. Higher placements will continue to leave more cattle on feed compared to a year ago.
