High Replacement Prices Are Impacting Dairy Culls, Corn Futures Took a Step Back

We start with a review of the latest USDA Livestock Slaughter report and how replacement values are impacting cull cow slaughter. We also talk about the slide in corn futures that parallels oil markets, and how tech companies continue to support Wall Street indexes.

Transcript

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Hello and welcome to Chat BDC. I'm back with a quick update on business news, crossed ag and financial markets. We've got your three articles teed up for today, which is Wednesday, May 27th. We're going to focus on the dairy slaughter report. Look at commodity markets and our regular update on Wall Street. So let's get to it. After a steady decline in cow slaughter, dairy producers are starting to see a shift in culling decisions. The high cost of replacement heifers has made it difficult to justify culling cows. That trend is beginning to change. Recent numbers show more cows moving to slaughter again over last year's numbers. Based on the latest USDA monthly livestock slaughter data released on May 21st, the number of dairy cold cows marketed through U.S. slaughter plants in April of this year was about 215,000 head. That's down about 24,000 from March, but it was almost 8,000 more than April of last year. Weekly slaughter toward the end of 2025 had reversed a long-term trend, if you remember, where weekly dairy cow slaughter had trailed year earlier levels with a total decline of nearly 556,100 head. However, in the weeks since September of last year, that number has increased 80,400 head from the same period a year earlier. USDA estimated that there were 9.645 million dairy cows in the U.S. herds in April. That's up 10,000 from the March estimate and putting the April culling rate at about 2.2% of the herd. Based on the monthly data, year to date, which is January through April, dairy coal cow slaughter now stands at about 938,000 head, which is up 48,500 from the same period one year ago. For a complete overview, check out Audrey Schmidt's article on progressivedairy.com. Switching over to commodity markets, July corn futures fell 5 cents to 458.25 per bushel late in overnight trading. After earlier dropping to $4.57, the contract's lowest intraday price since May 15th. Futures gained 7.5 cents last week to end a two-week slide. December corn fell 3.75 cents to 482 and 3 quarters after earlier touching $4.80. Contract's lowest intraday price since April 21st. Corn technicals are showing signs of breaking down as July futures pushed below the 100-day simple moving average, currently at $4.58 and 3 quarters, and tested trend line support around $4.57 overnight. December futures pushed below trend line support, which is around $4.82, and are poised for a third consecutive close below the 50-day SMA, which is $4.87. Key downside levels to watch in July futures include the May intraday low at $4.55. December futures are down 24 cents or almost 5% from a 2.5 year intraday high at $5.06.5 cents. Posted May 13th and may be heading for a test of the $4.75 to $4.78 area. Bar charts front month national average cash corn price rose about a cent Friday to just under $4.23.5 cents, up $8.25 for the week. Friday's average was about $39. Friday's average was about 39.3 quarter cents below July futures, narrowing from 40.5 cents a week earlier. Grain traders will continue to monitor the Iran war, but the markets appear to be at an inflection point as focus increasingly shifts to spring weather. The near-term outlook leans bearish with most of the crops planted, ample moisture reserves across most of the corn belt and warmer temperatures starting this week likely encouraging early crop development. Prices may work lower this week, barring a major escalation in the Middle East conflict, or further details on $17 billion in China ag purchases, the White House announced last week. Progressively lower highs seen on daily charts convey weighing interest from buyers, and funds may further pair back a still sizable net long position in corn and other markets. Further price weakness this week will likely solidify ideas that the market has established spring highs in corn and soybeans. Wrapping up in financial news, the SP 500 and the Nasdaq composite rose to fresh all-time intraday highs on Tuesday, led by technology as traders weighed the prospects of a potential U.S. Iran deal being reached to end the war. The broad market index last gained a half percent while the tech heavy NASDAQ was up 0.9%. Doddone's industrial average traded down 216 points or 0.4%. U.S. stock markets were closed. Shares of micron technology jumped 20% and topped a to shares of micron technology jumped 20% and topped a trillion dollars in market capitalization amid bullishness among analysts on the street. UBS in particular sees more than 100% upside ahead for the SOC, stating benefits from its long-term agreements. The name finished last week with a sizable gain, though it started off the period with losses amid a broader sell-off in memory chip names. Fellow memory chip stocks, Seagate Technology and Western Digital followed Micron higher, gaining 5 and 8% respectively. The Roundhill Memory ETF added 15% and scored a fresh record high. Well that's all for now. As always, thanks for tuning in. If you found it useful, please share, subscribe, comment, share, tell all your friends. I'll be back tomorrow with more news across AG and financial markets. But until then, I'm Mike Opperman and goodbye for now.