September 1, 2008

US producers continue to turn off large numbers of cull cows to cash cows, according to the latest USDA livestock slaughter report.

However, cow prices are hitting unprecedented gains in 2008 due to rising demand for manufacturing beef and very tight imported beef supplies.

Utility slaughter cow prices averaged US$98.80/lb live weight during July (30 percent above the same time last year) after hitting a record price of US$101/lb toward the end of the month.

High cow prices have been driven by weak economic conditions in the US, which has squeezed household budgets, pushing retail purchases from higher priced cuts to lesser cuts and mince meat and from restaurant meals to hamburgers.

In July, US cow beef slaughter recorded the largest increase across cattle categories. So far this year, US cow-calf and dairy producers have sent 239,000 more cows to slaughter, which is up 7 percent on the same time last year – indicating that the liquidation of the US cattle herd is continuing.

Around 3.017 million cattle were slaughtered in July, up 5 percent on-year. Average carcase weights held relatively firm on last year at 353kg.

Furthermore, an increase in US cow supply is expected in the coming months as the US heads out of its peak demand period for hamburgers (summer "grilling" season). This could see a decline in prices for cows and lean manufacturing beef in the US.