An economic analysis of cull cow price trends in Alabama

Abstract

The objective of this study is to analyze the slaughter cow prices in Alabama from 2004 through 2018 to help cow-calf producers capture the most value for their cull cows based on historical price trends. A producer typically sells cull cows shortly after the decision is made to cull the cow from the herd, and in many cases, this is the best option in terms of profitability. Another option is to delay the marketing of cull cows to add value and profitability for the producer. A producer must account for all added input costs to determine if delaying the marketing of cull cows will be more profitable to the operation. When the decision to delay the marketing of cull cows is made, options to add value include increasing weight and body condition, waiting to capture a higher price due to price seasonality, or marketing as a bred replacement female instead of a slaughter cow. The data shows that instead of selling in October and delaying marketing to increase weight and body condition and selling in March of the following year showed an increase in price except for October 2008 – March 2009 and October 2015 -March 2016. In the Lean slaughter cow category by delaying marketing to increase weight and body condition to move up to higher range within the Lean category there is on average $1.18 - $12.26 cwt increase in price. In the Boning slaughter cow category by delaying marketing to increase weight and body condition to move up to a higher range within Boning category is on average $1.15 - $2.05 cwt increase in price. In the Breaker slaughter cow category by delaying marketing to increase weight and body condition to move up to a higher range within the Breaker category on average $0.19 - $1.73 cwt increase in price when going from Breaker Lt to Breaker Md. Yet delaying marketing to increase weight and body condition to move from Breaker Md to Breaker H on average $0.19 - $1.28 cwt decrease in price. The data shows there is little to no benefit in delaying the sale to move to a higher range within the Breaker category as the added input costs will likely outweigh any increase in value. When a producer can increase weight and body condition to enable the cow to move to a higher grade this can add value, moving from Lean to Boning on average sees $5.93 - $7.45 cwt increase in price, however moving from Boning to Breaker averages $1.11 – $2.93 decrease in price. The price seasonality of the slaughter cow market shows that prices are typically higher in the spring and summer months- May typically being 6-8% higher than average price and then price falls below the average price in the fall- November being 10-12% lower than average price due in part to the supply of slaughter cows. Additionally, when a producer makes the decision to delay the marketing of cull cows to a later date, exposing the cows to bull will allow the producer the potential to market the cows as a bred replacement instead of a slaughter cow. A producer must look at their current resources in terms of pasture space and forage availability to determine if marketing of cull cows is more profitable to sell immediately or to delay to a later date.