Author: Charley Martinez

In drought-stricken areas, cattle producers are having to sell more cattle than normal because of the lack of grass and increased costs of production. While some producers are selling feeder calves earlier than they wanted, the number of cull cows going to the market creates multiple ways to look at the situation. This article covers the current cull cow market and some potential management strategies to think about moving forward. 

            Figure 1 contains the weekly slaughter cow prices for Southern Plains auctions (current drought-stricken areas). The red line represents the 5-year average from 2016-2020, and illustrates the normal seasonal pattern observed in cull cow markets. The dotted line represents the weekly prices for 2021. Prices in 2021 were below the average from January-June, and then stayed relatively true to seasonal expectations. So far in 2022, prices have been frequently above the 5-year average and 2021 prices. This has created higher salvage value for cattle that had to be culled this year. But prices are starting to trend down due to the increased cull cow supply entering the market. The downward trend is expected based on seasonal patterns, but the decrease will likely continue. In the coming weeks, drought and production costs are going to be major drivers of slaughter cow supply as the market tries to find a floor. 

            From a management strategy, producers often start with older cows first. After the older cows, producers get pickier on reasons to cull (bad feet, other non-ideal characteristics). These types of cows have probably been culled already, which leaves the producer with management decisions (cull bred females? Cull yearling females?, etc.). To help with that decision, identify inefficient females. If they are bred, analyze the females calving cycle. If they are yearling females, look at their pedigree, and identify any maternal reproduction issues. If a producer has already culled based on age, bad feet and other physical traits, and reproduction, then look for alternative marketing strategies such as selling females to another producer in a region that isn’t in drought. If a producer has superior genetically based cattle, they probably won’t find enough salvage value from sale barn prices and having a marketing strategy to find more value could be useful for not only increased salvage value, but also for cash flow reasons. 

Martinez, Charley . “Between a Rock and a Dry Place: Culling Decisions“. Southern Ag Today 2(30.2). July 19, 2022. Permalink

In recent years, Southeastern producers have asked whether testing for Persistently Infected (PI) Bovine Viral Diarrhea (BVD) virus generates a premium for feeder cattle. The answer likely depends on certain factors. For example, if a group of feeder cattle is born and raised on the same ranch (home-raised), and the producer has a good vaccination program, then the producer might not PI test them before marketing. The risk of PI’s is likely much lower for cattle coming from a closed herd. Co-mingled cattle are likely to have a higher risk of being PI-positive. Backgrounding and stocker operations commonly  source calves from multiple cow-calf operations and multiple groups at auctions. However, co-mingled calves are perceived by buyers to be of higher risk than single-owner calves. So, sellers can use PI testing as a marketing tool to lower the risk perception of the cattle they are selling. 

A recent University of Tennessee study examined price determinants at the Lower Middle Tennessee Cattle Association (LMTCA) Video Board Sale from 2015-2020. Figure 1 contains the annual percentage of PI tested lots sold for a for this sale. This trend has been seen in other value added sales throughout the Southeast. 

Figure 1. Annual Percentage of PI Tested Lots Sold

PI tested lots were found to generate a $1.19/cwt premium. These lots included cattle that sold from North Carolina, Alabama, and Tennessee. While there were home raised lots that were tested, majority of the tested lots were co-mingled lots. On average, cattle weighed 820 pounds in the study, generating a potential premium just under $10 per head. The cost of PI-testing varies by location, volume, and test type. In general, the test costs around $4-8 per head. However, it is important to note the test cost mentioned here does not include additional time spent, facilities utilized working cattle for testing purposes, or revenue loss from the proper disposal of cattle that test positive. 

While there are some costs and risks associated with testing for PI-BVD, selling a “PI tested” lot does generate a premium. It does this by letting the buyer know that the cattle are guaranteed PI free and healthy, which mitigates risk for the buyer. These advantages are especially beneficial for co-mingled lots. 

Martinez, Charley. “Should Feeder Calves be PI Tested?”. Southern Ag Today 2(19.2). May 3, 2022. Permalink