High beef prices and dismal profit margins pushed dairy producers to cull their herds hard through summer. Although these dynamics have improved since then, the dairy herd continued to contract in September.
According to Sarina Sharp, analyst with the Daily Dairy Report, fewer heifers have been available to replace the milk cows that have been sent to slaughter, which also could be slowing cull rates. As of July 1, 3.65 million dairy heifers were ready to move into the national herd, the lowest mid-year number since 2004, according to USDA’s semi-annual Cattle report released in July.
USDA’s monthly Livestock Slaughter reports show that between January and August, dairy producers sent 121,700 more cows to packinghouses than they did in the first eight months of 2022. Over that same period this year, the U.S. milk cow herd declined 0.3% or by 32,000 cows.
“As milk prices improved and feed costs retreated, cull rates this fall slowed significantly compared to seasonal trends,” Sharp said. “High slaughter rates this summer also contributed to the slowdown because there were fewer cows with health issues or low milk yields left in the herd.”
In September, dairy cow slaughter volumes were 20,000 head lower than the prior year and the lowest for any September since 2014. Through the first half of September, the slaughter rate remained nearly 6% behind the historical average.
“Dairy producers have reduced cull rates just to keep head counts steady,” Sharp said. “Through August, producers were able to cull hard and keep their barns full of heifers and milk cows purchased from dairies exiting the industry.” However, now fewer operations are closing, and the supply of heifers for sale has begun to dry up as evidenced in USDA’s Cattle report, she added.
“Even though the dairy herd could soon stop contracting, tight heifer supplies will limit rapid growth in the U.S. milk-cow herd throughout next year,” Sharp said.
