by Scott Clawson, Oklahoma State University

As I roam the two-lane highways in eastern Oklahoma going to producer meetings, cull-cow prices and the decision to rebuild the cow herd are common points of discussion. In fact, if I ask who has sold some cull cows lately, more smiles show up thinking about that check than anything else. The story behind the great cull-cow prices has been discussed (see the March 11, 2024, edition). That leaves the expansion discussion up for grabs. Exactly what do cull-cow prices have to do with it?

Much of the unease of the expansion decision is tied to the sheer size of the investment. If we decide to retain our own heifers, we will turn down a price that we have rarely seen for a weaning-age heifer. Additionally, producers have reported that private-treaty and special sales are fetching strong prices for bred females.

One of the most common ways to analyze an investment is to use a net present value (NPV) analysis. That is just a fancy way to say that we are going to invest in something (cow), and we expect it to generate cash (calf sales minus expenses) for a certain number of years (cow longevity), then we will salvage it (cull the cow). NPV guides us in answering the question: “What is that investment worth or what should we pay for that replacement?”

Selling as a bred cow, improving body condition and selling younger are all factors we can manipulate in our culling decision to maximize the cash returned in the final year.

While we process that, there are several issues to unpack. Calf prices, annual cost to manage the cow and longevity usually see the most focus — and they are all important.

However, in which year of the cow’s productive life will she return the most cash to our investment? Most commonly that will be the year she is culled. In that year, she will likely calve for the last time in the spring and in the fall, we will sell her and her calf. This highlights the effect cull values can have on the math of this investment. On average, we tend to run a cow to failure. More specifically, we will keep her around until she is open, has a bad bag, comes up lame, etc. In those instances, we usually get the worst of what the market has to offer.

My speculation is that our current cull-cow markets have changed the math from the red to the black on some cattle that we retained during the past decade while prices were more moderate and expenses increased. Going forward, are there things we can do to avoid getting the worst of the market? Selling as a bred cow, improving body condition and selling younger are all factors we can manipulate in our culling decision to maximize the cash returned in the final year.

You can use the Cow Bid Price Estimate Calculator to evaluate different options for your ranch.

Editor’s note: Scott Clawson is northeast area agricultural economics specialist for Oklahoma State University Extension and a regular contributor to OSU’s Cow-Calf Corner newsletter. This article was reprinted with permission from the May 20, 2024, edition.