What’s Going On In The Dairy Cow Market?

In the July 1 Daily Livestock Report the editor’s note that since the beginning of the year the dairy cowherd was contracting while the beef cowherd was up a full 1 percent.

The July 1 cattle inventory will be released by USDA-NASS on July 19, 2019, and the editors estimate the dairy cowherd has continued to contract through the first half of the year but has shown signs of slowing. First quarter slaughter was the largest of any quarter since 1986. The latest USDA-NASS Milk Production report came in with inventory at 9.333 million head. “Milk cow inventory is reported every month, and we would expect the July 1 inventory number to be reflective of those monthly numbers reported in June and July Milk Production Report” say the editors. Still, last year milk cows totaled 9.4 million on July 1. With monthly dairy cow slaughter up 5.6 percent year to date (Jan-May), dairy cow inventory is likely to be below a year ago. Margins in the dairy sector have improved somewhat but for many regions of the U.S. margins remain tight. Further, it seems unlikely the number of dairy cow replacements will rise above a year ago.

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Dairy Cow Slaughter Increased Over Summer Months


June-Sept. Dairy Cow Slaughter. From Daily Livestock Report- Oct. 12

Based on USDA weekly slaughter statistics available through September 23, total cow slaughter for period June 3 – September 23 was 1.842 million head, 161,600 head (+10%) higher than the same period a year ago. While the number of beef and dairy cows slaughtered during this period was evenly divided, dairy cows contributed almost 1/3 of the entire increase, about 55,700 head. A larger dairy cowherd implies a larger cull rate so some of the increase is normal.

Dairy margins have so far been good, but not great. Class III milk prices were hovering around 17 cents per pound in June and July but the dropped to as low as 15.6 cents by mid-September. Low feed costs and robust export demand, especially if butterfat continues to underpin dairy industry profitability and will likely keep dairy cow slaughter in the single digits in Q4.

Dairy Slaughter Numbers Up From 2016

According to the United States Department of Agriculture report this week, dairy cow culling was up nearly 8,900 head from March of 2016. The USDA reported that 271,000 dairy cows were harvested through federally inspected plants in March. That’s up nearly 18,000 head over February; However, March had three more business days than February.

The Midwest area, including Iowa, Kansas, Missouri and Nebraska saw 5,700 dairy cows go to slaughter in March, while the first quarter slaughter totaled 18,400 head.

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