The dairy cattle market, according to Jake Bettencourt, manager of Turlock Livestock Auction Yards (TLAY) Video Sales, has been experiencing a period of steadiness over the past six to eight months. While the trend over the past two years has shown a rise in the value of dairy replacements and beef-on-dairy cattle, the market seems to have found its balance. This positive stability is crucial for the dairy industry, allowing for growth and expansion, particularly in the Midwest and upper Midwest regions.
According to Bettencourt, dairy replacements prices seem to have settled, however, beef on dairy crosses not so much.
“The trend for the last two years or better has been the value of these dairy replacements were getting higher and higher,” Bettencourt says. “And for the last six to eight months, it just feels like we’ve kind of found a place to settle.”
A Conservative Approach to Growth
Internally, at TLAY, there has been an ongoing debate about whether to be cautious or optimistic about this upward trend. Bettencourt says there is confidence in the market’s potential to maintain its current levels for another 12 to 18 months. This optimism is based on the demand and supply dynamics observed, especially when it comes to younger replacement cattle, which appear to be valued at a high level.
“There is a growing demand towards younger dairy heifers,” he shares. “So, there’s growth on the horizon.”
This growth matches the need to supply the $8 billion dollars in processing investments forecast to come online in the next few years. Bettencourt says as long as cull cows and beef-on-dairy calves stay at the level they are at, the dairy replacement market will continue to perform well.
“I know it’s hard to wrap your head around it for some people, but these replacements really aren’t that high in relation to everything else,” he says.
Choices and Strategies for Producers
For dairy producers, the decision between focusing on beef-on-dairy calves or concentrating on growing replacements remains complex. Both strategies aim to maximize profitability and maintain herd health. While feed costs have been relatively reasonable, milk prices are not at level that generate significant profit, thus pushing producers to rely on cattle sales to support their operations.
“We’ve talked to some producers who are starting to make a few more dairy heifers,” Bettencourt shares, noting the good corn crop on the horizon will help keep feed costs relatively inexpensive. “However, when you throw in these cull cow and beef-on-dairy checks, that is true income and adding profitability to dairies.”
Holstein Versus Jersey: A Demand Perspective
When it comes to breed preferences, Bettencourt says Holsteins seem to be in slightly higher demand compared to Jerseys.
“There is a higher value of a beef-on-dairy calf that comes out of a Holstein compared to a beef-on-dairy calf that comes out of a Jersey or a Jersey cross, and there seems to be more availability in Jerseys than Holsteins right now,” he shares. “Holsteins are in slightly higher demand right now.”
Bettencourt says this has been the case for a while now. He also says there still is plenty of interest in Jersey and Jersey cross cattle, stating Jersey fresh cows and springers range from $2,700 to $3,200 and Holsteins anywhere from $3,500 to $4,100.
“In fact, I would say, of the expansions that we’re aware of, and we’ve been talking to customers about filling some of those procurements of replacements, it feels like there’s more growth and there’s more expansion where folks are looking for Jerseys and/or crosses,” he says.
Enthusiasm Remains
While challenges remain for those involved in the dairy industry, there is an overarching sense of optimism especially on the income derived from cull cows and beef-on-dairy calves.
Bettencourt says Jersey beef-on-dairy calves are going from $750 to $900 for day-old calves and Holstein beef-on-dairy calves are going anywhere from $1,200 to $1,350. He says a sale that they worked with sold dairy-on-beef cattle that weighed 550 lb. that went as high as $4.31 per pound.
“I mean, it seems like every other week there’s a new record,” he says. “It’s certainly supplementing income for these dairy producers.”
Dan Basse, president of AgResource Company emphasizes the production of beef-on-dairy crossbreds is critical for maintaining the industry’s current output levels.
“It is something that needs to be in every herd,” he says.
As the dairy industry continues adapting to market demands, there is hope that current positive trends will benefit producers for the foreseeable future. This balance offers a promising outlook for growth and stability within the industry.
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