Dairy Cull Cow Numbers, USDA Cattle on Feed Report, and Government Support Payments

Today we get an update on dairy cull cow data, a review of Friday's USDA Cattle on Feed report, and the potentially harmful affect regular government support payments could be having on agriculture. 

Transcript

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Hello and welcome to Chap BDC. Here's the top stories from Blackboard Daily today, which is Monday, July 27th. We will focus on dairy col cow numbers, look at Friday's Cattle on Feed report, and a review of what a potential government support program could really mean. So let's get to it. Starting out in dairy with a report on progressive dairy by Audrey Schmitz, with the U.S. dairy herd continuing to expand, it follows that more cows are available for normal herd turnover, resulting in higher culling totals than a year ago. June dairy cow slaughter increased from both the previous month and the same month a year ago, reflecting the larger overall herd. Even with more cows marketed for slaughter, the pace of culling remains generally in line with herd expansion. Based on the latest USDA monthly livestock slaughter data released on July 23rd, the number of dairy culled cows marketed through U.S. slaughter plants in June 2026 was estimated at just over 208,000 head. While that's up 16,400 for May, it was also 19,300 more than June of last year. Weekly slaughter toward the end of 2025 reversed a long-term trend where weekly dairy cow slaughter had trailed year-earlier levels with a total decline of nearly 556,000 head. However, in the weeks since September 2025, it's increased over 96,000 head from the same period a year earlier. USDA estimated the June 2026 U.S. dairy herd at 9.677 million dairy cows, up 192,000 cows from June of last year, and up 19,000 from the May estimate, and put the June culling rate at about 2.2% of the herd. Based on monthly data, year-to-date dairy cow slaughter now stands at about 1.3 million head, up 62,800 from the same period a year ago. Now let's take a look at the July 1 cattle on feed report that came out on Friday from USDA and a look at that from DTM Progressive Farmer. Cattle and calves on feed for the slaughter market in the U.S. for feed lots with capacity of 1,000 or more head. Total 11.4 million head on July 1st. Inventory was 2% above July last year. And the inventory included 7.12 million steers and steer calves, up 3% from the previous year. This group accounted for 63% of the total inventory. Heifers and heifer calves accounted for 4.25 million head, up slightly from 2025. Placements in feed lots during June totaled 1.4 million head, which is 3% below a year ago. Net placements were at 1.35 million head. Friday's Catalon feed report will likely be viewed by and absorbed by the market as a neutral report, says DTN analyst Shalee Stewart, following the report's release. She said that from a logistical point of view, someone could argue that the report should be found as bearish, given that the U.S. beef cow herd sits at a historic low. Yet at the same time, we're slowly building up increased inventory in the feedlot sector as cattle are being fed to greater weights and as they're spending more time on feed. She says that traders seem to only look at one thing, and that's whether or not the pre-report data varies from the actual date data released. Given that the pre-report estimates were nearly spot on, it's likely that the Friday's report will be glanced at and given little afterthought, and traders and cattlemen alike will likely spend more time rolling over the cattle inventory report. Finishing up with an article by Margie Ucklecamp on AgWeb and a look at a potential government payout, recently USDA Secretary Brick Rollins told the Senate Appropriations Committee supplemental farmer aid is meant to be a springboard, not a new floor for government support. If approved, that money would come on top of the $44.3 billion in government payments, USDA's economic research service has estimated for farmers this year combined, if you do the math, at a total of $55.4 billion. If spread evenly across $153.8 million U.S. taxpayers, that total would equally roughly $360 per taxpayer. For decades, U.S. farm programs have been defended as counter-cyclical tools, support that kicks in when prices fall, disaster hits, or trade fro flows break even. But new and expanded payments layered on top of crop insurance and other safety net programs are raising a more uncomfortable question. Is government support still a temporary bridge through hard times, or is it becoming a structural part of how U.S. farm income is generated? In the article, Margie quoted Wes Davis, who's an economist with Meridian Ag Advisors. He says the U.S. farm safety net has was always designed to be counter-cyclical. And the thing we're now starting to run into is the question of whether it is at risk of it becoming more structural and becoming part of how the farm economy functions and works. That's all for now. As always, thanks for tuning in. If you found it useful, please drop a comment. Please be sure to check out blackbirddaily.com as well for the poll stories for all these topics. Don't get signed up for that Blackboard Daily. I'll be back tomorrow with more business stories across the local financial markets. Until then I'm like Apple.