U.S. dairy producers continued to slow culling in early May. For the week ending May 4, producers sent just 48,975 cows to packers, the first time slaughter volumes have fallen below 50,000 head in a non-holiday week in nearly eight years, according to USDA data. In the week ending May 11, dairy cow slaughter fell even further to 47,977 head.
Sarina Sharp, analyst with the Daily Dairy Report, said that while the ongoing slowdown in culling could be seasonal as well as an impact from highly pathogenic avian influenza, “it’s also possible that economics have been an even bigger driver. Class III milk prices began to rally in mid-April, promising better margins for producers after several tough months, and the latest slaughter data offer the first hint that dairy producers could be trying to grow their herds.”
To keep their barns full or expand, producers likely need to keep low-producing cows in their herds, which means per cow production will suffer somewhat, Sharp noted. “With dairy heifer inventories at multi-decade lows, producers have fewer opportunities to cull low-producing cows and replace them with a heifer that has calved and is ready to enter the milk parlor,” Sharp said. “Producers who don’t want to pay sky-high prices for replacement heifers can either keep more low-end cows in the herd, effectively lowering cull rates, or milk fewer cows.”
From September 2023 through April 2024, it appears dairies employed both tactics; dairy cow slaughter was 221,200 head lower than same period a year earlier, and the U.S. dairy herd shrunk by 26,000 head. With the first two weeks of May showing a sharp reduction in slaughter, the theory that improved economics has incentivized producers to grow their herds is gaining traction.
“Slaughter volumes typically decline during spring flush and reach a seasonal low in early summer,” she noted. “However, the week ending May 4 was also the first week that lactating cows were required to test negative for HPAI before crossing state lines. Dairy cows destined for the packing house did not require a test, but any out-of-state heifers meant to replace cull cows would have had to be tested, which might have given producers who rely on these heifers a reason to pause.”
At the same time, though, HPAI could be boosting slaughter volumes in some areas of the country, as producers cull affected milk cows that remain less productive, she said. For instance, slaughter rates held steady in the Great Lake States, where HPAI has been most prevalent, but fell sharply in other regions.
For more on milk prices, read:
