Will the Decline in Dairy Culling Continue?
Source: The DairyNews
The trend of reduced dairy cow culling, observed through the first half of 2024, appears likely to persist. USDA Ag Marketing Service data indicates that fewer dairy cows were sent to sale barns in June, continuing a 45-week trend of decreased culling compared to the previous year, amounting to approximately 332,000 fewer cows.
Phil Plourd, president of Ever.Ag Insights, attributes this slowdown to several critical factors, including a reduced milking herd, limited replacement heifer availability, and slight improvements in milk income margins. Plourd notes, “The low slaughter figures reflect two realities: a scarcity of replacements and the high cost of those available, coupled with improved margin prospects that slow the slaughter pace. This dynamic could have implications for productivity.”
Robin Schmahl of AgMarket.Net concurs that culling will likely remain lower compared to the previous year, although month-to-month variations may occur. He cites prolonged heavy culling, leaving fewer cows available for culling, as a significant factor.
Two additional factors are influencing this trend:
Beef-on-Dairy Interest: Dairy producers have increasingly turned to beef-on-dairy breeding as a lucrative income source. This practice limits the need for aggressive cow culling since beef calves fetch higher prices than dairy calves, significantly boosting farm income. Schmahl notes, “Many producers are breeding up to 50% of their herds to beef bulls, maintaining adequate dairy replacements but creating a tight heifer market with high prices. This scarcity increases the incentive to retain cows as finding replacements becomes challenging, especially with strong beef prices.”
Lower Feed Prices: The outlook for continued low feed prices through the end of this year and into next year further supports reduced culling. Schmahl highlights the year-over-year decline in grain prices, which are favorable for dairy producers, enhancing their profit margins. For instance, the average price for corn dropped from $6.49 per bushel in June 2023 to $4.48 per bushel in June 2024. Similarly, the price of alfalfa hay fell from $263 per ton to $195 per ton over the same period. Concurrently, the All-milk price rose from $17.80 in June 2023 to $22.80 in June 2024.
“These favorable feed costs lower the profitability threshold for milk production per cow,” Schmahl explains. “While cow numbers remain below last year’s levels, the gap is gradually narrowing. We should expect reduced culling to continue as long as these conditions persist.”
In conclusion, the decline in dairy culling is poised to continue, driven by limited replacement heifer availability, strong beef-on-dairy returns, and lower feed costs, which collectively contribute to better profit margins and reduced culling incentives for dairy farmers.
Robin Schmahl of AgMarket.Net concurs that culling will likely remain lower compared to the previous year, although month-to-month variations may occur. He cites prolonged heavy culling, leaving fewer cows available for culling, as a significant factor.
Two additional factors are influencing this trend:
Beef-on-Dairy Interest: Dairy producers have increasingly turned to beef-on-dairy breeding as a lucrative income source. This practice limits the need for aggressive cow culling since beef calves fetch higher prices than dairy calves, significantly boosting farm income. Schmahl notes, “Many producers are breeding up to 50% of their herds to beef bulls, maintaining adequate dairy replacements but creating a tight heifer market with high prices. This scarcity increases the incentive to retain cows as finding replacements becomes challenging, especially with strong beef prices.”
Lower Feed Prices: The outlook for continued low feed prices through the end of this year and into next year further supports reduced culling. Schmahl highlights the year-over-year decline in grain prices, which are favorable for dairy producers, enhancing their profit margins. For instance, the average price for corn dropped from $6.49 per bushel in June 2023 to $4.48 per bushel in June 2024. Similarly, the price of alfalfa hay fell from $263 per ton to $195 per ton over the same period. Concurrently, the All-milk price rose from $17.80 in June 2023 to $22.80 in June 2024.
“These favorable feed costs lower the profitability threshold for milk production per cow,” Schmahl explains. “While cow numbers remain below last year’s levels, the gap is gradually narrowing. We should expect reduced culling to continue as long as these conditions persist.”
In conclusion, the decline in dairy culling is poised to continue, driven by limited replacement heifer availability, strong beef-on-dairy returns, and lower feed costs, which collectively contribute to better profit margins and reduced culling incentives for dairy farmers.
