Eye-popping beef prices should last a while

Hoard's Dairyman: 

Eye-popping beef prices should last a while

Date: 
Fri, 04/16/2010

They’re black and white (or brown) on the outside, but these days there’s also a golden glow to cull dairy cows.

Even as milk prices continue to slip, beef prices have been moving steadily higher most of the year, so much so that culling lists today may have never been a source of as much income for dairy producers. Beef industry forecasts and USDA say it’s a situation that should last through summer.

Continued tight supplies are part of what’s behind the price run-up, and futures prices even briefly topped the magic $1 per pound mark during trading on April 9. Ample supplies and modestly lower prices are another reason. The trickle-down effect on cull dairy cow prices has been welcome news for producers during what has been a disappointing financial year so far.

It wasn’t so long ago that springers cost $2,000+ and beef prices were in the high 30s (cents per pound), making the beef-to-replacement-heifer ratio insanely high at nearly 4:1. But now, with beef prices beginning to creep into the low 70s in some areas and heifers costing about $1,300, the ratio is getting close to 1:1.

In fact, sometimes it’s even less. Earlier this week a southern California dairyman showed us his beef settlement sheet that was full of $1,000+ prices for individual cows and sprinkled with several in the $1,200s, $1,300s, and even a couple in the $1,400s.

With prices like those there may never be a better time for dairy producers to clear out problems from their herds and upgrade to newer genetics.