Timing is key to impact of dairy slaughter

Mark Rozin/Capital Press Cooperatives Working TogetherÕs dairy herd retirements in 2009 kept pressure on the beef grinding industry and reduced beef producersÕ prices and beef slaughter. The impact of CWT will follow beef producers into 2010.

Cattlemen glad to see latest herd retirement took into account beef marketing cycle

By CAROL RYAN DUMAS

Capital Press

With its latest herd retirement under way, Cooperatives Working Together will have sent about 250,000 dairy cows to slaughter over the past year.

The impact on beef producers has been large.

Beef producers lost $4 to $5 a hundredweight during a three-week period in June when CWT sent cows to slaughter and $3 a hundredweight again in the three-week period in August when CWT sent more cows to slaughter, said Gregg Doud, chief economist with National Cattlemen's Beef Association.

Beef producers weren't happy when CWT announced another herd retirement in October, fearing that slaughter would hit at their own peak culling season and when demand for ground meat is lower. Fears subsided a bit when it was determined this next slaughter -- at 26,000 cows -- would be more modest then previous retirements.

Dick Coon, president of the Washington Cattlemen's Association and a Benge, Wash., rancher, was originally quite upset at CWT's timing of its latest slaughter.

"We're still concerned, but it's sure a lot less of a hit than we were talking about before," he said.

But there are still a lot of beef cull cows that need to go to market.

"The less competition the better," he said.

Still, he said, "I admire the dairymen for pulling themselves up or attempting to on their own. But I'm disappointed in the $350 million (government aid) and direct aid."

Tom McDonnell, Idaho Cattle Association executive vice president, said original estimates were that this latest round of CWT slaughter could impact beef prices $3 a head.

"Cows accepted are far less than what was planned. The impact will be marginal," he said. "I have to give them credit that before this last buyout they were paying attention to markets, not to disrupt them too much."

Steve Meyer, livestock industry analyst and president of Paragon Economics, said even though CWT earlier moved cows to slaughter at slower marketing periods for beef cattle, it still had an impact.

"That whole thing all year has taken the shine off the grinding complex," he said. "It caused grinding beef to be lower than it otherwise would have been."

Wholesale prices last week were $1.27 a pound for 90 percent lean ground beef and 61 cents a pound for 50 percent lean, compared with $1.44 and 82 cents, respectively, a year earlier.

While lower beef cattle prices coincided with CWT's earlier slaughters and beef prices are down significantly from last year, bigger implications might still be ahead, Meyer said. CWT has slowed beef cow slaughter and herd reduction.

The combination of the dairy slaughters, unfavorable prices for beef producers and plenty of grass has probably resulted in a larger beef herd, he said.

"We'll have to deal with that next year," he said. "We're going to keep pressure on the grinding complex."

Adding to that pressure is the low price of chicken leg quarters, he said.

"It's abysmal, half of where they were a year ago," he added.

Processors can substitute chicken for beef in processed products such as luncheon meats, he said.

Chris Galen, vice president of communication for National Milk Producers Federation, said an average of 3 million cattle go to slaughter each month, and CWT's activities in the past year are just a fraction of that total.

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