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Strong beef demand boosts cull bull market
Dry weather, drought, high input costs, and strong cull breeding stock prices are bringing a surge of cull beef cows and bulls to slaughter. Stepped up culling adds to the current supply of beef on the market.
Looking ahead, packers will keep competing to buy cattle from shrinking cattle inventories. Although few in number, bulls play an important role in supplying beef. Cow and bull processors tend to be much smaller than fed cattle processors. Still these non-fed beef packers strive to run plants at capacity to capture efficiencies. Doing so may lift packers’ ability to bid for bulls.
Through the first almost seven months of 2022, bull slaughter is 5.1% or 14,955 head above year ago levels (Figure 1). Producers have also sent 14.3% or 277,367 more beef cows to slaughter than in the same period in 2021. Producers have culled 7.5% of the national beef cow herd, which is the highest ever for this time of the year. The data goes back to 1986. Stepped up culling trimmed the July 1, 2022 US beef cow herd by 2.4% to 30.35 million head according to surveys by USDA for the National Agricultural Statistics Service (NASS) mid-year Cattle report (Table 1).
Herd will keep shrinking
Years of crunching numbers show that the July 1 inventory of beef cows and heifers for beef cow replacement is a good predictor of the beef cow inventory six months later. Including bulls makes the model an even better predictor. Regression analysis allows researchers to predict or explain the variation of one variable based on another variable or set of variables. Using this, it possible to set up a predictive model that explains 98.62% of the variation in January 1 beef cow numbers.
July 1, 2022 inventories of beef cows, beef replacement heifers, and bulls and a linear time trend predict the January 1, 2023 beef cow herd at 29.202 million head. This would be down 3.1% from January 1, 2022. Any decline would make 2023 the fourth consecutive year with a smaller January 1 beef cow inventory. A 3.1% decline would make the January 1 beef cow herd the smallest since 2014 which was the last bottom in the cattle inventory cycle.
Weekday federally inspected (FI) cattle slaughter is running about 124,000 head. The run roughly consists of 60,000 steers, 37,000 heifers, 15,000 beef cows (what USDA labels as other cows), 10,000 dairy cows, and 2,000 bulls. On average, bulls make up about 1.6% of the total FI cattle slaughter. Bulls tally 7.4% of the combined total FI cow and bull slaughter.
Weekly bull slaughter shows a notable rise in some regions. Bull slaughter in region 3 (DE-MD, PA, WV, VA), which accounts for about 10% of the national total, averaged 21.4% above year ago levels through late-July. Region 4 (AL, FL, GA, KY, MS, NC, SC) and region 6 (AR, LA, NM, OK, TX) each have about a fifth of the nation’s bull slaughter and are up 8.9% and 4.9%, respectively. Region 7 (IA, KS, MO, NE) has about 17% of the total and is up 5.0%. Imports of Canadian slaughter bulls are up 13%, or 2,441 head, so far in 2022 compared to the same period in 2021.
Because of confidentiality constraints, USDA has discontinued reporting bull slaughter in a number of regions. Beginning in January 2013, and then after being reported in 2014 and 2015, USDA no longer provides weekly bull slaughter data for region 5, which includes IL, IN, MI, MN, OH, and WI. This is an important region to monitor as it accounted for over 20% of all U.S. bull slaughter in 2012, 2014, and 2015. Beginning in 2022, USDA also does not publish bull slaughter for region 8, which includes CO, MT, ND, SD, UT, and WY. In 2021, this region had less 4% of the total bull slaughter but it is a region that has been dealing with persistent drought.
Two bull categories
USDA’s Agricultural Marketing Service (AMS) defines a bull as a mature, approximately 24 months of age or older, uncastrated, male bovine. However, for the purpose of grading standards, any mature, castrated, male bovine, which has developed or begun to develop the secondary physical characteristics of an uncastrated male is also considered a bull. Think masculine head, neck crest, and coarse muscling.
Bull slaughter is made up of both beef and dairy animals. Traditionally this has been a two-segment market. One is driven by culling activity and consists of typically older and/or lower, or non-performing bulls. The other segment consists of bullocks or young, under approximately 24 months of age, male bovine, castrated or uncastrated, that have developed or begun to develop the secondary physical characteristics of a bull. Quality grade standards exist for bullocks, which are essentially the same as those for steers of comparable maturity. Yield grades are the only grades applicable to animals in the bull class.
Bull price range
Under the voluntary price reporting authority of USDA-AMS, sales of feeder and slaughter cattle at local auctions are collected, summarized, and published. For Iowa, this is in the Iowa Weekly Cattle Auction Summary. A total of 1,097 slaughter bulls have shown up on this report so far in 2022.
AMS reports slaughter bull prices by dressing designation and yield grade. Most of the volume is in average dressing and yield grade 1-2. Figure 2 shows these bull prices against representative slaughter cow and finished steer and heifer prices.
Bull prices range from $14 to $23 per hundredweight (cwt) more than slaughter cow prices, depending on the conditioning of the cows. Bull prices average about $35 per cwt less than finished steer and heifer prices. None of the bulls in the report were listed as bullocks. But on occasion, market reporters denote lighter weight sale lots as “return to feed” possibly suggesting these are younger bulls with the potential to be fed to choice or select quality grade.
The National Weekly Direct Slaughter Cattle – Premiums and Discounts report lists an average discount for bullocks of $35 per cwt with a range of $15 to $55 per cwt based on individual packer’s buying programs.
Bulls, 500 pounds and over, on July 1, 2022 totaled 2.00 million head, unchanged from July 1, 2021 according to the USDA NASS mid-year Cattle report. Most of these are beef breed bulls. Besides the cattle on feed inventory, bulls were the only class of cattle that were at par with July 1, 2021 levels. All other categories of cattle were below July 1, 2021 inventories.
AI less common in beef herds
According to USDA’s National Animal Health Monitoring System (NAHMS) Beef Cow-Calf 2017 study, 95.5% of beef operations had cows that were exposed only to bulls. For operations that had beef replacement heifers, 89.1% exposed these heifers only to bulls. Most heifers (76.8%) and nearly all cows (92.9%) were exposed only to bulls. About 15.5% of heifers and 5.5% of cows were artificially inseminated (AI) and exposed to bulls as a follow-up. Given that 90.7% of all beef females were exposed only to bulls, use of AI is not that prevalent and is not trimming cull beef bull supply much.
On the other hand, rising use of AI in dairy herds is reducing the need for as many dairy bulls. The dairy industry has used AI since the 1930s. In 2014, 89.3% of dairy operations used AI for breeding (AI only or AI and natural service) according to the USDA NAHMS Dairy 2014 study. AI was used exclusively on 43.7% of operations. Many dairy producers are now using sexed semen to obtain more heifer calves. Dairies are also using beef bull semen on dairy cows and heifers whose offspring they do not intend to use as replacements. Doing so boosts the value of dairy calves not intended for replacements.
Bull management strategies
All 500 pounds and over bulls in inventory are intended for slaughter, eventually. But some are intended for breeding first. Some will be castrated, some won’t. In commercial operations, bull calves are often castrated before they leave the operation. In seedstock herds, bull calves are often sold for breeding purposes, so castration is not routinely practiced.
According to the USDA NAHMS Beef Cow-Calf 2017 study, 62.0% of commercial operations castrated bull calves before sale. A higher percentage of operations in the Central region (86.2%) of the United States castrated bull calves before sale compared with operations in the West (57.0%) and East (48.9%). Of bull calves born on commercial operations, 79.0% of bull calves were castrated before sale. A higher percentage of bull calves were castrated before sale on operations in the Central region (92.0%) than on operations in the West (76.4%) and East (63.4%).
The percentage of operations that castrated bull calves and the percentage of bull calves castrated on these operations increased as herd size increased. A higher percentage of large operations (90.9%) castrated calves before sale compared with medium (80.5%) and small (55.1%) operations. On large operations (200 or more beef cows) 91.7% of bull calves were castrated before sale compared with 83.6% on medium operations (50-199 beef cows), and 60.1% on small operations (1-49 beef cows).
The decision to cull many bulls happens in the spring after failing a breeding soundness exam. Some producers cull bulls in the fall if the bull, or their offspring, have any undesirable characteristics that would make them unsuitable for the next breeding season. Culling open cows in the fall is common. Cows can also be evaluated during the spring as well. Culling in the fall and adding weight and targeting a seasonally higher market in the spring can often add value. Some producers factor income tax strategies into breeding herd culling decisions.
Lee Schulz, extension livestock specialist, 515-294-3356, email@example.com