For most of the country, this is the start of a grazing season that looks to be promising. The Drought Monitor reports that areas of Texas and Florida are still experiencing severe drought, and moderately dry conditions persist in the West. But the rest of the country should have good grazing conditions that will lend support to the bred-cow market moving forward. A smaller national herd should also sustain replacement-cow prices for much of 2009.

While market signals may be encouraging beef producers to retain females, this is still expected to be a contraction year with further downsizing of the national beef herd. The dairy industry is also expected to be downsizing its national herd to offset an oversupply of milk. In mid-May, Cooperatives Working Together, the dairy industry’s self-help program, announced that it had tentatively accepted 388 bids representing 103,898 cows. This is supposed to be the first in a series of herd retirements planned over the next 12 months.

Field auditors will be visiting the 388 farms, and cows should be moving off of dairies by late May. “The bids selected ranged from farms with fewer than 50 cows to dairies with over 5,000, demonstrating that farms of all sizes in all areas are facing a very difficult year in 2009,” said Jerry Kozak, president and CEO of the National Milk Producers Federation, which administers CWT. “Those that took advantage of CWT’s offer to retire their herds will aid others still wanting to farm by reducing the amount of milk coming to market and strengthening prices going forward.”

Slaughter-cow prices have hit what many analysts have called the seasonal high. It has been predicted that prices will remain relatively steady until the expected seasonal decline in August. There has been concern that the industry-funded dairy herd retirement program may exert negative pressure on this segment of the market. While it is expected that approximately 5,000 to 6,000 dairy cows will be entering the marketplace on a weekly basis, their impact may not be as severe as expected due to strong demand for trim and an overall decrease in cow slaughter.

May Prices

The Drovers’ auction market survey reports that bred-female prices reversed a downward trend and ended May at $788.34 per head. Aged, bred-cow prices were back up and closed out the month at $581.50. There was a limited test for bred heifers, and the price was down from $824 the month previous to $781.25.

Young and middle-aged, open females were relatively steady, ending May at $59.75 per hundredweight. Marketings were still light for aged, open cows, but average prices were up to $46.13 in May. Heiferettes were still relatively steady at $61.35.

Large pairs were back down compared to April prices and ended the month of May at $977.92. Prices for small pairs continued to be on an upward trend, however, and closed out May at $940.84. Small or aged cows were also up and averaged $750.42 in May.

Prices for canner and cutter cows were up slightly again and ended May at $42.96. Utility and commercial cow prices were also higher at $50.38 but were still lower than last year’s price of $53.34 for the same period.