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Current Indications Suggest Cull Cow Prices Are Likely To Hold Steady And Follow Patterns This Year

Mon, 18 Feb 2019 14:33:01 CST

Current Indications Suggest Cull Cow Prices Are Likely To Hold Steady And Follow Patterns This Year
Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel analyzes the seasonal increases in cull cow prices and how they can fluctuate year to year.

"Boning cow prices in Oklahoma in the latest weekly data averaged $59.50/cwt., up from $58.00/cwt. the previous week. Boning cow prices have risen four consecutive weeks since mid-January. The increases are exactly as expected seasonally as cull cow prices typically increase sharply from January into February on the way to seasonal peaks in May.   Cull cow prices typically achieved the bulk of the seasonal price increase by March and hold close to seasonal peak prices through August before declining to fall lows.

"Though seasonal price patterns are among the strongest tendencies of cattle markets, they do not always follow exactly. Cull cow prices in 2018 did not follow seasonal price patterns for the entire year. After increasing seasonally from January to March, cull cow prices began to weaken almost immediately. Boning cow prices in Oklahoma peaked in March at $67.59/cwt. before declining to an average level of $58.99/cwt for the May to September period. Boning cow prices dropped further in seasonal fashion with the lowest annual prices occurring in early December and leading to December lows averaging $47.88/cwt. Those December lows were the lowest monthly boning cow prices in Oklahoma since late 2009. Oklahoma boning cow prices averaged $58.58/cwt. in 2018, down 10.2 percent year over year.

"Cull prices were under pressure in 2018 largely as a result of increased cow beef supplies due to herd expansion in recent years. From record low beef cow culling rates in 2015, beef cow slaughter has risen as herd inventories grew and culling returned to normal rates. In 2018, dairy cow slaughter was higher than expected as a result of dismal dairy market conditions. As a result, 2018 total cow slaughter was 6.2 million head, up 1.0 million head or 20 percent above the recent low of 5.2 million head in 2015. In addition to significantly larger cow beef supplies, there may also be some demand weakness in the processing beef market as ground beef competes with record large pork and poultry supplies.

"Cull cow prices are likely to follow seasonal patterns more closely in 2019. Cow slaughter is projected to decline about 1.5 percent in the coming year, moderating cow beef supplies. Both beef and dairy sectors may see modest decreases in cow slaughter in 2019. Total beef production is projected to increase 1.5-1.8 percent in 2019 so overall beef supplies will remain large but the cow beef market will moderate faster as herd inventories likely peak. Current indications suggest that 2019 cull cow prices may hold close to steady on an annual average basis with a chance of slightly higher prices year over year, especially in the last part of the year."



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