Sort & Cull

The cattle market has endured a lot of stress in the last two years, and unfortunately the heavy load just doesn't seem to be getting lighter. Waltzing into 2021, we understood that the first quarter was going to be a challenging time for the market. But now that the market is well into the second quarter, many wonder when the market will be brighter for cow-calf producers, backgrounders and feedlots.

Monitoring the nation's fed cattle slaughter levels is extremely important, as it has great ramifications on feeder cattle buyer aggression in the upcoming months. While we focus on the matter at hand (fed cattle and feeder cattle prices), we cannot forget to keep close tabs on the cows and the trajectory of the national herd.

Looking at the total number of beef cows that have been slaughtered in 2021, the data clearly points to a liquation cycle. With the onset of higher feed prices, drought plaguing many of the Northern states, the never-ending problem of finding labor and the continued uncertainty in the fed cattle arena, producers are culling extensively on their existing cow herds. The market currently has too many balls in the air for producers to juggle and profitability is becoming harder to attain.

The week ending May 1, 2021 processed right at 1,164,700 head of beef cows. Thus far, there's only been four weeks when 2020's slaughter levels have outpaced those of 2021, and the industry has seen a stark increase in the number of beef cows processed in the last four weeks. As with all things, looking at the market's behavior in years past is vital, and when you compared the nature of 2021's market to those of 2017, 2018, 2019 and 2020, it becomes quite clear that the industry is liquidating. Looking at the year-to-date figures of 2021 compared to the five-year average of 1,043,060 head of beef cows being processed by the first week of May, 2021 has surpassed the five-year average by a staggering 121,640 head.

In the short term, cow liquation can make it difficult to find a good time to market cull cows and the fed cattle market could see weaker prices as packers have cows to buy. Looking long term, fewer cows means that the market will also have fewer feeder cattle to sell and will hopefully mean that producers can demand higher prices for their calves when it comes time to market.

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