First-Half 2018 Dairy Cow Slaughter Hits Levels Not Seen Since 2013
Dairy producers are sending their cows to slaughter at a rate not seen since 2013, when producers culled nearly 1.56 million head in the first six months of the year—the same pace as this year. At the same time, the cost for replacement heifers is at lows not seen in many years.
“Low springer values imply that the supply of heifers for sale outweighs demand, and that suggests producers have little appetite to expand their herds. This could set the stage for a contraction in the U.S. milk herd,” says Sarina Sharp, analyst with the Daily Dairy Report. “But given the opportunity for producers to replace cows inexpensively, production per cow is likely to remain high.”
The price being paid at auctions across the country for quality Holstein springers to replace milk cows has averaged near $1,200/head over the past month, putting the cost of replacement heifers at lows not seen in decades, notes Sharp.
According to USDA’s monthly Livestock Slaughter report, dairy cow slaughter continued to decline seasonally in June but was still running above the levels of the past several years. Dairy producers sent 237,500 dairy cows to slaughter in June, up 0.3% from a year ago and the second highest total for any June since at least 2000, behind only June 2009, when 256,000 cows were slaughtered. So far this year, dairy producers have culled more cows each month than in the previous year. For the first six months of 2018, slaughter was 4.9% higher than the same period a year ago.
This year’s high slaughter rate does not appear to be the result of the size of the nation’s milk herd or the size of the replacement herd, notes Sharp. According to USDA’s Cattle report, there was no change in the number of milk cows and heifers expected to calve, compared to a year ago.
“June’s dairy herd was exactly the same size as the herd was a year ago,” Sharp says. “In the first part of the year, some of the increase in dairy slaughter could be attributable to the larger year-over-year milking herd, implying that the strong slaughter rate was not necessarily the result of a higher cull rate, but in May and June, the milk cow herd was basically on par with last year’s,” Sharp notes. For the first six months of this year, the U.S. milk herd averaged only 0.21% larger than last year’s herd.
“Similar to what was occurring in 2013, today’s dairy producers are also struggling with poor margins, and a growing number are selling their herds or filing for bankruptcy. Dairy cows and replacement heifers are losing value as a result,” Sharp notes. In 2013, dairy cow slaughter continued strong through the second half of the year, reaching 3.08 million head, the largest cow slaughter since at least 2000.