Marketing Cull Cows. Cattle Cycle & Cull Cows Cattle Cycle –Long as 15 years ~ short as 7...

Marketing Cull Cows

Cattle Cycle & Cull Cows

• Cattle Cycle– Long as 15 years ~ short as 7– 8-10 years of profitability

• Counter – Cyclically1) Cost of production

2) Ability to purchase and sell at lows and highs

3) Different attitude toward risk

JANUARY 1 COW INVENTORYU.S., Annual

5

10

15

20

25

30

35

40

45

50

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002

Mil. Head

Beef

Dairy

-0.4 Percent

2004 = 32.9 Million Head

-1.7 Percent2004 = 9 Million Head

JANUARY 1 TOTAL COW INVENTORYU.S., Annual

40

42

44

46

48

50

52

54

56

58

60

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Mil. Head

C-N-02A07/23/04

Livestock Marketing Information Center

Data Source: USDA/NASS

Weekly F.I. Cow Slaughter

70

80

90

100

110

120

130

140

150

160

01/10 02/28 04/17 06/05 07/24 09/11 10/30 12/18

Week Ending

Thousa

nd H

ead

2003 2004 5 Yr Avg

Source: USDA & K-State Research & Extension

KSU Dept. of Ag Econwww.agmanager.info

U S TOTAL COW INVENTORYvs FI COW SLAUGHTER

Annual

32

36

40

44

48

52

56

60

1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003

Mil. Head

4

5

6

7

8

9

10

11

Mil. Head

Total CowInventory

FI CowSlaughter

C-S-273/8/2004

Cattle Cycle & Cull Cows

Rules of Thumb

• What do these numbers Mean?– Cow slaughter less than 13% of Inventory

indicates herd buildup– Greater than 15% indicates decline

– Heifer Slaughter less than 37% of Cow herd considered growth

Importance of Understanding Cow Slaughter

• 15-20% of a producers revenue comes from the sale of cull cows and bulls

• Cow slaughter generates 70-75% of domestic non fed beef

• A high percentage of ground beef comes form cows– Ground beef accounts for 44% of all beef consumed

Importance of Understanding Cow Slaughter

• Approximately one half of all cows slaughtered are dairy cows

• About 1/3 of of domestic non-fed beef production comes from dairy cows.

Economic Importance

• Approximately 7million pounds of Non-Fed Beef.– 50% slaughter cows– 9% from bulls– 13% from non fed steers and heifers– 28% from imported

• Equates to 20% of total

beef production

Processors

• Rosen Diversified 5 plants– Yankton, SD Cimpl Meats 400 /day

– St. Paul MN

– Long Prairie, MN 1,000 / day

– Omaha, NE 950 /day

– Gibbon, NE 1,000 /day

• Swift 2 plants– Omaha, NE and Idaho

• Iowa Producers– Tama Ia. Plant 30% cows 500 / day

• Privately held Plants– Lovett Pack, NE; Host of ones in WI

Marketing Cull Cows

• Questions– When are most cull cows sold– When is the greatest demand for cull cow meat

Marketing Cull Cows

• Questions– When are most cull cows sold– When is the greatest demand for cull cow meat

• Most sold from October – December– Pregnancy checked off grass, old poor performance

• Greatest demand for Ground BeefSummer Months ~ can be frozen for storage

AVERAGE DRESSED WEIGHT -- COWSFederally Inspected, Monthly

540

550

560

570

580

590

600

610

620

JAN MAR MAY JUL SEP NOV

Pounds

Avg.1997-2001

2002

2003

C-S-24F10/24/03

Livestock Marketing Information Center

Data Source: USDA/NASS

Cows: Percent Lean Weight Price

Lean Premium White 65-75 1404-1534 lbs 56.00-59.50

Breakers 75-80 1305-1710 lbs 50.50-55.50

Boners 80-85 1162-1479 lbs 45.00-50.00 High Dressing 52.00

Lean 85-90 975-1490 lbs 44.00-48.50 High Dressing 50.00 Low Dressing 42.50-43.00

Sioux Falls Cow Prices October 22, 2003

USDA, Market News

Cows: Percent Lean Weight Price

Lean Premium White 65-75 1404-1534 lbs 58.00-66.00

Breakers 75-80 1305-1710 lbs 54.00-56.00

Boners 80-85 1162-1479 lbs 52.00-54.00 High Dressing 58.00

Lean 85-90 975-1490 lbs 49.00-52.00 High Dressing 56.00 Low Dressing 45.00-46.00

Sioux Falls Cow Prices October 20, 2004

USDA, Market News

Marketing Cull Cows

Questions to be asked

1) What season of the market are you in?

2) The price difference between grades of cows?

3) Cost of feeding?

4) Select cows that will gain and obtain higher grades

5) Consider market place.

Percentage Price Increases Between Cull Cow Grades

Cutter Utility Commercial

Canner 9% 14% 15%

Cutter - 5% 6%

Utility - - 1%

Pritchard, SDSU

Percentage of Cows in Each Grade Following a Feeding Program of Shelled Corn and Corn Silage

Days

Fed

Grades

Can Cut Utl Com +

0 64% 28% 8% -

50 18% 57% 24% 1%

77 8% 21% 65% 6%

105 - 19% 74% 7%Can = Canner Cut = Cutter

Utl = Utility Com + = Commercial or higherPritchard, SDSU

Marketing Cull Cows

Iowa State Data

- Feed 60 – 90 days to obtain White Fat

- Average daily gain 3.8 lbs

- Feed costs were 52.23/cwt

- Conversions were 10 to 1

Cancer Eye

Bruising

Bruising

• Tim Loss (26.8 mil lbs) $23.0 mil

• Loss of Primal $52.0 mil

• Avg loss per head $11.75 / hd

• Producer controlled $ 4.00 / hd

Downer Cows

• Only 1% But….

Causes problems when animal right activist get a hold of pictures

Proper Condition

Proper Condition

Quality Losses Per Head

Carcass condemnation 11.99Trim dirt/ Bruises 12.00Loss of offal 4.00Hide devalued 7.00Injection Site Lesions .75Yellow Fat 2.30Poor Muscling 14.50Excessive Fat 17.75Light Carcasses 4.00Other 1.20Total 76.00

Strategies to Improve Quality

1) Monitor herd health2) Monitor Condition Scores3) Decreased hide damage ~ Insects4) Reduce Bruising5) Reduce Injection site lesions6) Market clean cattle7) Euthanasia disabled cattle

Market in a Timely Manner!!!

Marketing

• Live– Auction markets– Live basis– Risks???

• Packer Direct– Delivery– Carcass basis– Risks??

Marketing

• Live– Auction markets– Live basis– Risks??? NO Risk

• Packer Direct– Delivery– Carcass basis– Risks?? Great Risk ~ condemned

carcasses trim ect

Marketing

• Where to sell– Local Auction Markets– Ask how many cow buyers and who they

represent

• How to sell– Do Auctions use sorting– How many do the sell (large groups or Small)

Marketing

Maximizing Price

• Time of year

• Dressing percent

• Condition– Quality, Fatness, Structural soundness and

Age

Importance of Understanding Cow Slaughter

• 15-20% of a producers revenue comes from the sale of cull cows and bulls

• Cow slaughter generates 70-75% of domestic non fed beef

• A high percentage of ground beef comes form cows– Ground beef accounts for 44% of all beef consumed

• Approximately one half of all cows slaughtered are dairy cows

• About 1/3 of domestic non-fed beef production comes from dairy cows.

Marketing Cull Cows

• Questions– When are most cull cows sold– When is the greatest demand for cull cow meat

• Most sold from October – December– Pregnancy checked off grass, old poor performance

• Greatest demand for Ground BeefSummer Months ~ can be frozen for storage