Agricultural News
After 32 Months of Red Ink- Feedlot Cattle Back in the Black
Mon, 15 Mar 2010 5:30:42 CDT
Estimated commercial cattle feeding returns in the Southern Plains finally turned positive in February after 32 consecutive months of red ink, as calculated by the Livestock Market Information Center, based in Denver. Those estimated returns are based on feeding a 750-pound steer in a typical Southern Plains commercial feedlot including costs for all feedstuffs, yardage, etc. The LMIC estimated returns do not account for any risk management strategies.
LMIC estimated per head returns for a typical steer sold in February were positive by just over $20.00 per head. Positive closeouts were propelled by the highest monthly average fed steer price since November 2008, combined with manageable feedstuff and feeder steer costs. For example, the cost of the feeder animal that was sold as a fed steer in February was the lowest for any month since early 2004.
Cash cattle prices in the southern plains have continued to move higher, as we saw prices for market ready animals in the feedlots up by three dollars per hundred this past Friday, with the Texas Cattle Feeders reporting over 18,000 head at $95 per hundred. The Daily Price Breakdown showed over 35,000 head in cash cattle trade this past week, signaling a major cleanup of market ready supplies. Here are the prices reported on Friday by TCFA:
18,084 @ 95.00
4,231 @ 94.50
8,937 @ 94.00
200 @ 150.50
354 @ 150.00
Panhandle Volume
Steers/Heifers 35,464
Looking ahead, feedlot closeouts for the next few months should remain in the black, but by June the picture could change, again. The estimated breakeven sale price for a steer to be sold for slaughter in June is about $91.00 per cwt., which incorporates the recent run-up in feeder cattle prices. Even though recent futures market prices were in the low $90's per cwt. for this summer, the cash fed cattle market will need several positive factors to come into play to achieve those price levels, including rather robust beef exports and improved domestic demand for beef. So, fed cattle to be sold this summer that are not hedged or contracted could easily loose money. Given the loss of financial equity by cattle feeders in recent years, any significant cattle feeding red ink will rather quickly result in the bidding down of feeder cattle prices.
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