Producers Crying Over Spilt Milk as Dairy Herd Liquidation Continues to Impact Beef Cattle MarketWed, 01 May 2019 10:34:53 CDT
Liquidation in the dairy herd as a result of prolonged pressure on producer profit margins and current incentives in the cull cow market has significantly increased to the overall tonnage going through the beef pipeline as of late. Katelyn McCullock, director of the Livestock Marketing Information Center, has been watching what has been going on in the dairy industry. In a recent conversation, she says the industry has experienced very high volumes of dairy cows entering slaughter during the first part of 2019. In fact, March data shows dairy cow slaughter reached up over 300,00 head, the largest monthly volume since 1986.
McCullock says the price pressure that has continued to strain the dairy industry has been ongoing for nearly five years, although higher milk prices in March have injected some optimism. But, she insists it will take more than just one month of better prices - several months actually of above $18 cwt. to turn this situation around. Nonetheless, McCullock expects dairy cow slaughter numbers to maintain fairly high volumes throughout at least the first half of 2019. With that in mind, she says the beef cattle industry will obviously be affected by this as well. According to her, the dairy cow slaughter numbers have weighed on cull cow prices since the last part of 2018. Any boost in cull prices, she says, would only further incentivize more dairy cow liquidation. For this reason she believes prices in that market will not climb notably high the balance of this year. This situation, though, has placed an ample lean beef supply onto the market. Fortunately, we are nearing Memorial Day and the start of the summer grilling season which should help metabolize the growing retail inventory and in turn maintain current price levels in the market. In the meantime, the global protein situation remains fairly uncertain which McCullock says is challenging for stakeholder confidence.
“We’re expecting the summer quarter to be the lowest in values as current supplies of cattle on feed come through that system,” she said. “We’re still at very high levels for cattle on feed inventory total, but these prices should pick up into the fourth quarter on the fed side.”
Listen to McCullock’s complete outlook on the dairy industry’s impact to the beef cattle industry, with Radio Oklahoma Ag Network Farm Director Ron Hays, on today’s Beef Buzz.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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