In 2007, beef cow numbers declined by 338,000 head. The largest declines occurred in regions where drought was the most severe. Drought conditions continue to persist in certain regions in the country and continue to have an impact on heifer retention and herd expansion. Combine adverse feed conditions with record-high hay and fuel costs, and it is likely that many producers will continue to place heifers in feedlots.

Cow slaughter remains high, even above last year’s peak levels. High hay prices, coupled with sub-par pasture and range conditions in some areas, are contributing to the decline in the beef herd. Based on heifer placement levels and cow slaughter figures, herd liquidation appears to be continuing. The July USDA Cattle Inventory Report will likely reflect the continued reduction in overall herd numbers, and the trend could possibly continue into 2009. 

High feed and commodity prices are also influencing dairy producers to cull at an aggressive rate. Dairy-cow slaughter rates have increased over last year by approximately 1.3 percent or 11,000 head. That trend may put some pressure on overall slaughter-cow prices, however. As the United States enters peak grilling season, the downturn in the economy will lead many consumers to look for lower-priced cuts, including ground beef. That trend should add support to the slaughter-cow market.

Light marketings of bred females have not tested the market to a great extent, but prices have remained steady to higher during the last month. Drought conditions in certain parts of the country, as well as higher feed prices will likely negatively affect female prices for the short term.

Profitability factors for cow-calf producers support expansion if the feed resources are available. Light feedlot placements in March and April, combined with larger marketings this spring, will reduce cattle on feed numbers. Growing export opportunities, coupled with reduced beef production, will reduce overall net beef supplies and have the potential to rally fed-cattle prices. An upturn in the fed market should lend support to replacement-female prices during the latter part of the year. 

May prices

The Drovers’ auction market survey reports that bred-female prices decreased by $46.67, ending May at $762 per head. Aged, bred-cow prices also declined by $21.25 per head to close out the month at $627.50. The downward trend was not reflected in bred-heifer prices, which increased by $11.67 during May to $894.17.

Young and middle-aged open females were up slightly during May, ending at $63.42, a $1.47 increase over last month’s figures. Prices for aged cows declined by $2, ending the month at $48.75. Heiferettes ended the month at $63.60, up $2.25 per hundredweight.

Large pairs increased by $46, ending the month at $1,012.92. Small pairs also increased in value by slightly over $19 per pair to average $961. Small or aged cows with calves decreased by $30 and closed the month of May at $718.75.

Prices for canner and cutter cows increased by $1.47 per hundredweight during May, closing out at $45.75. Utility and commercial cow prices increased $3.28 to end the month of May at an average of $53.34.