Unprecedented beef cow culling rate of 13.5% anticipated for 2022

Jeff Swenson

Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.

Jeff Swenson

Feedlot operators started the week asking for higher prices and packers offering money steady with last week. Country trade was too light to identify a price trend, and prices at auction markets were mixed.

It is still uncertain where beef cow numbers will end up given the liquidation and heavy culling in the dry parts of the country. However, Lance Zimmerman, North American beef analyst with Rabobank, told DTN earlier this month that “we are on pace to have a beef cow herd culling rate this year at 13.5%.

"We've never seen that high of a culling rate. It's an extreme we are going to have to digest and it's a paradigm shifter for analysts who earlier this year believed the odds of revisiting inventory lows of 2014 and 2015 were not likely. Well, they look pretty likely now.”

Last week’s harvest estimate of 638,000 head was 40,000 head below the previous week and 17,000 head more than the same week last year.

Wholesale beef prices moved higher based on the drop in production but it was not enough to erase early week losses, finishing Friday at $259.42, down $3.45 from the previous Friday.

This week’s short production schedule will lend wholesale prices continued support. Fourth quarter beef production is projected to drop 5.1 percent from the fourth quarter of last year. Some analysts report retailers are interested in purchasing beef now, fearing they may get caught short later if they do not purchase now.

Record high turkey prices on horizon?

Pork production during the fourth quarter of 2022 is expected to decline by 1.6 percent compared to last year. It is reasonable to believe the seasonal lows are being established now.

Some analysts are projecting record high turkey prices heading in to the holiday season. This could benefit pork in a large way. Prices are not making it overly attractive to countries seeking pork, but rising hog prices in China could cause the country to turn to the U.S. However, more COVID-19 related shutdowns and reports of a weakening economy there could negatively impact the opportunity.

China released the first batch of pork from its central reserves this week ahead of the upcoming Mid-Autumn Festival and the National Day holiday. Estimated hog harvest last week was 2.350 million head, 55,000 head less than the previous week and 17,000 head more than the same week last year. Lower ham and belly primals led the pork carcass cutout value lower last week, finishing Friday at $102.25, a nearly $3.75 drop from the previous week.

Market lamb prices

USDA Market News called market lambs $5.00 to $20.00/cwt higher last week, noting that “very, very heavy” lambs sold $5.00 to $15.00/cwt lower. The gross lamb carcass value was lower, posting at $561.25 on Wednesday this week.

Estimated sheep and lamb harvest last week totaled 32,000 head, equal to the previous week and 4,000 head less than the same week a year ago. Lamb and mutton production year-to-date measured in pounds is down 5.5% compared to 2021, while sheep and lamb harvest total in head is 9.8% lower than last year.

Wisconsin livestock market roundup

Prices were mixed on most classes of livestock at Wisconsin and surrounding state auction markets. Choice beef breed steers and heifers were mostly steady to lower with last week. However, some markets reported strength later in the week.

High-yielding, high-grading cattle brought $122.00 to $142.00/cwt. Some markets reported packages of steers and heifers from $142.00 to $147.00/cwt and some exceptional groups above.

Choice Holstein steers were steady to $2.00 lower at $107.00 to $132.00/cwt with high grading Holstein steers bringing $132.00 to $137.00/cwt with some packages selling higher. Silage fed, under finished, or heavy dairy breed steers brought $75.00 to $107.00/cwt. Dairy x beef steers were bringing $105.00 to $142.00/cwt.

Cows were mostly lower from $50.00 to $74.00/cwt with some selling to the high 80’s and reports of some beef types selling higher. Doubtful health and thin cows were bringing $50.00/cwt and down.

Dairy breed bull calves were mixed, bringing $40.00 to $125.00/cwt with heavier, well cared for calves up to $160.00/cwt. Beef and beef cross calves were mostly steady to higher, selling to $370.00/head.

Market lambs brought $110.00 to $120.00/cwt with reports of tops at $160.00/cwt.