There has been much anticipation that culling would increase significantly due to continued low milk prices. Milk prices have been low for an extended period, but culling has not reduced cow numbers as anticipated. There have been farms exiting the dairy business with a substantial number of them due to smaller farms selling out because many have reached an age where they have decided to retire. Many do not have family members that wish to continue the dairy farm. Many of those cows have moved to another operation and the plant space is being assumed by another farm that wishes to expand. It is known that cows raised in a tie-stall barn often cannot adapt to a free-stall barn, making that generally not a good fit. However, cows continue to move from one farm to the next.
Cow numbers have been declining with the U.S. dairy herd totaling 9.334 million head in March, a decline of 98,000 head from March 2023. This was 12,000 more cows than there were in January. Cows are being held onto more willingly due to the expensive heifer replacements. Over the past few years, the bar has been raised with many of the cows on dairy farms maintaining high milk production leaving fewer to move to the slaughter plant.
The March Milk Production report showed a decrease in cow numbers of 7,000 head after increasing by 9,000 head in February leaving cow numbers somewhat steady so far this year. One reason we may not see dairy cattle slaughter as high may be due to the beef-on-dairy trend. More dairy cattle are being bred with beef to increase the value of the calves and generate greater farm income. This leaves fewer dairy cattle that will be sent to the market.
This is evident when looking at the Livestock Slaughter reports. The March report showed dairy cattle slaughter down from February and substantially lower than March 2023. March dairy cattle slaughter totaled 244,600 head, down 8,100 head from February and 61,600 head less than a year ago. This is the lowest slaughter for March since 2009. So far this year, monthly dairy cattle slaughter has been significantly below the previous 4 years.
It will be interesting to see what the rest of the year brings, especially if milk prices improve as the year progresses. Current Class III futures indicated prices may be somewhere in the $18.00 range with Class IV contracts in the $20.00 to $21.00 range.
For more industry news, read:
- US to Test Ground Beef in States With Bird-Flu Outbreaks in Dairy Cows
- Female Empowerment is Strong at Miltrim Farms
- H5N1 Mandatory Testing For Interstate Movement Of Dairy Cattle In Effect
- Seven Common Threads of Top-Producing Herds
- What Should You Financially Consider Before Investing in Technology?
Robin Schmahl is a commodity broker with AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Robin’s office is located in Elkhart Lake, Wisconsin. Robin may be reached at 877-256-3253 or through the website www.agdairy.com.
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.
