COW MARKET PRESSURE
MARKET UPDATE
By Patrick Linnell, CattleFax Analyst CattleFax
The cull cow market has come under significant pressure in the last couple of months with U. S. average Utility Cow prices dropping over 10 % from August into September, double the long-term average of a 5 % decline over that period. A near perfect storm created this aggressive decline and suggests the bulk of the seasonal price risk has already been realized.
Beef cow slaughter has seasonally increased, driven in part by drought-forced culling and early weaning for some operations, but remains an estimated 10 % below year-ago in September. This early movement favors that beef cow slaughter will remain below year-ago through the fourth quarter, although still seasonally elevated. Recent rain in many areas should also help cap beef cow slaughter as some seek to retain culls into the new year.
On the dairy side, cow slaughter has also increased seasonally and remains narrowly above year-ago levels, up 4 % in September. Milk margins have been challenged by a combination of flat milk prices and higher feed costs. Meanwhile, day-old beef-dairy cross prices have dropped over $ 500-per-head from their early-summer peak.
All told, the bulk of the seasonal increase in cow and bull slaughter has likely been realized, remaining seasonally large through the end of the year but below year-ago as the decline in beef cows continues to offset the slight increase in dairy cow slaughter.
Between overall demand for protein, the versatility of ground beef, and trade-down within the beef complex,
ground beef is projected to compose a record 57 % of U. S. beef consumption. With cow slaughter tight, demand continues to draw in record tonnage of imports to fill the gap. At the same time, Brazil and Australia filling their duty-free beef import quotas into China in recent months has pointed more of their product towards the U. S.
Then there is the highly publicized“ Affordable Beef” proclamation, allowing beef trim from“ other countries”( mainly Brazil) to be imported without the 26.4 % tariff for 90 days. So far, it appears that the tariff exemption has not meaningfully increased imports beyond what was likely going to be a record pace anyway, but qualifying product is now landing on the U. S. market at a lower price point.
Ground beef demand typically weakens into the fourth quarter. Combined with record beef imports and the temporary tariff pause, 90s lean prices may continue to have a weaker bias but have likely already accounted for the bulk of the seasonal increase in slaughter and adjustments in trade dynamics. Currently near $ 395 / cwt, domestic 90s lean should have support near $ 380 with U. S. average Utility cows supported near $ 140.
Bottom Line: Cull cow values have moved sharply lower but are likely approaching support, aided by improved precipitation. While remaining below year-ago, prices will remain historically strong and seasonally increase into 2027 though are likely to fall short of year-ago. www. NCBA. org NATIONAL CATTLEMEN 17