Beef revenue from cull cows contributes substantially to dairy farm profitability. Starting with RY2026, dairy farmers will have the ability to buy coverage against price risk on their cull cows using Livestock Risk Protection.
This article discusses how cull cows are priced in LRP. The first decision we had to make is whether cull cows should be priced similar to feeder cattle or to fed cattle. Contrary to our prior belief, the analysis suggested that cull cow prices more strongly correlate with CME Feeder cattle index. Over 2015-2025 period, the correlation between NASS cull cow price and CME Feeder Cattle Index is 0.94.
The correlation with 5-state area live cattle price used to settle LRP-Fed Cattle is 0.91.
Based on the analysis, we decided to price cull cows off CME Feeder Cattle Index.
Unlike unborn calves, the price ratio is very stable across years.
| Year | NASS Cull Cow Price | CME Feeder Cattle Index | Cull Cow / FC Index Ratio |
| 2015 | 104.11 | 206.12 | 51% |
| 2016 | 74.89 | 144.44 | 52% |
| 2017 | 69.56 | 144.33 | 48% |
| 2018 | 62.56 | 146.29 | 43% |
| 2019 | 62.29 | 140.68 | 44% |
| 2020 | 65.27 | 134.91 | 48% |
| 2021 | 70.13 | 146.54 | 48% |
| 2022 | 84.21 | 167.22 | 50% |
| 2023 | 102.43 | 217.59 | 47% |
| 2024 | 127.00 | 248.35 | 51% |
| 2025 | 135.75 | 281.97 | 48% |
While the price ratio is cyclically stable, there are some important seasonal considerations.
Both cull cows and CME Feeder Cattle index have seasonally high prices in July. However, the seasonality of cull cows is more smooth than seasonality in CME Feeder Cattle Index. To address differences in price dynamics, we decided to introduce separate Price Adjustment Factors for each end month.
| Month | NASS Cull Cow Price (2015-2024) | CME Feeder Cattle Index (2015-2024) | Cull Cow / FC Index Ratio |
| January | 74.51 | 166.15 | 44.6% |
| February | 78.47 | 165.05 | 47.5% |
| March | 82.92 | 164.10 | 50.6% |
| April | 84.80 | 164.68 | 51.4% |
| May | 85.95 | 164.27 | 52.3% |
| June | 88.27 | 170.77 | 51.8% |
| July | 89.53 | 175.19 | 51.1% |
| August | 89.20 | 176.73 | 50.2% |
| September | 85.55 | 174.93 | 48.6% |
| October | 78.97 | 173.21 | 45.4% |
| November | 75.26 | 171.38 | 43.5% |
| December | 73.51 | 169.28 | 43.1% |
The data used to set seasonal PAFs for RY2026 will span January 2015-December 2024. Once published by RMA in actuarial documents, Cull Cows PAFs for each end month will be kept constant for the entire crop year and will be updated annually for RY2027 based on additional data for 2025.
