Beef market helps stretch CWT retirement #10 budget

Hoard's Dairyman: 

Beef market helps stretch CWT retirement #10 budget

Date: 
Fri, 06/04/2010

Dairy producers are also beef producers, and wearing both hats has never been as strange as it has been in 2010.

Suddenly higher demand for beef around the world has been squeezing U.S. supplies this year, and the impact on cull dairy cow prices has been nothing less than amazing. We have personally seen dairy producers’ beef settlement sheets this spring that were littered with animals that brought at least $1,000. A few were over $1,300, and one was a ridiculous $1,536.

Why ridiculous? Because springing dairy heifers only cost about $1,300. It was just three years ago that it took four cull cows to buy one springer; now it takes well less than two. As beef producers, these are extraordinary times to be milking cows, and some dairy owners are no doubt faced with the ironic reality that their herds are worth more as hamburger.

It is this probably temporary alignment of moons and stars that explains the lowball flat rate buyout offer of $3.75 per hundredweight being offered in round 10 of the Cooperatives Working Together Herd Retirement Program. Bidding closes June 25, and there will no doubt be many takers, even though the amount is far, far below bid amounts accepted during previous CWT retirements.

For instance, the average bid price for all bids accepted nationwide in retirement No. 3 in 2005 was $6.75, and in the West it was $7.52. The average prices accepted nationally in rounds 5 and 6 in 2008 were $6.10 and $6.49, respectively. CWT officials, by the way, have not announced any average bid information since then.