When it comes to cull cows, the difference between a troublesome afterthought and a strategic profit center is usually a few months and some feed. That’s especially true this year as cattle numbers continue to decline.
First off, cull cows are ringing the cash register louder this year than at any time in history. In July, Tim Petry, North Dakota State University livestock economist, pointed out that cull-cow prices
were about $10/cwt. more than the prior year and about $5/cwt. more than the 2004-2008 average. That was with 15% more beef-cow slaughter through the first half of this year compared to the same
period in 2009.
“Higher prices are being supported by strong demand for hamburger and lower imports of manufacturing-grade beef,” Petry explains. “The ‘cheeseburger price war’ among several fast-food chains that have been promoting low-priced menu items during the economic downturn helped demand. And higher prices for competing meats, including chicken and pork, have also stimulated demand for hamburger.”
Incidentally and thankfully, declining imports of manufacturing beef have everything to do with economics rather than protectionism. Despite the fiction spouted by those who claim domestic cattle prices would improve if the U.S. closed its borders, the fact is that imported beef allows the U.S. to grow and maintain beef demand while propping a higher floor beneath beef prices. Through this spring, beef exports accounted for about $120/head of all fed cattle slaughtered, according to the Iowa Beef Industry Council.
If producers in this country begin maintaining or growing the herd, the number of available cattle will continue to decline. Either way, cull-cow price seasonality is almost as reliable as a politician asking for donations. Prices are typically lowest from October through January, and the highest from April to August. Since 1980, there has been only one year when that was untrue, says Dillon Feuz, Utah State University agricultural economist.
“The seasonal decline in cow prices usually begins in September, with sharp declines into November as beef-cow culling takes place. Although prices will likely be above last year’s depressed levels, that seasonal decline can be expected again this year,” Petry says.
So, those who keep their culls in the fall to feed a few months have more pounds to sell into a market that’s most always higher.
It’s not foolproof, though. You have to put the weight on economically without overfeeding the cattle. There’s also the matter of what cull cows will grade, driven by maturity, carcass cutability and fatness gauged by body condition score (BCS).
The grades are: Commercial (~BCS 7-8); Utility-Breaker (~BCS 6); Utility-Boner (~BCS 5); Cutter or Leans (~BCS 3-4); Canner or Lights (<BCS 3). Commercial grade usually commands the highest price, Breaker the next highest, and so on.
“Depending upon the weight and frame of a cow, it requires about 60-80 lbs. of weight gain to increase one BCS,” Feuz explains. “A cow with a BCS of 3 in the Lean (Cutter) 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 (Cutter) market class would only require about 70 lbs. of gain to get to a BCS of 5 and into the Boner market class.”
Feuz says determining the optimum rate of gain and length of the feeding period depends on the initial cow weight and BCS, the availability and cost of various feed sources, and the current price of cull cows.
“I encourage you to look at your own resources and evaluate carefully what options you have with your cull cows,” Feuz suggests to producers. “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.”
