Agricultural News
Calendar Year 2012 Could Yield Biggest Average Losses Per Head in Feedlots- Ever
Wed, 18 Jul 2012 05:28:07 CDT
The summer of 2012 is turning out to be a very grim time to be in the cattle feeding business- so says the Director of the Livestock Market Information Center, Jim Robb. We continue our conversation on today's Beef Buzz with Robb, who details the June results of the Center's analysis of cattle feeding returns. Robb says 2012 is shaping up to be a horrendous year for the cattle feeding segment of the beef cattle business- perhaps the worse ever from a financial point of view. Click on the LISTEN BAR below to hear his comments- and the following is the LMIC's take on the current bloodbath that is underway in feedlot country.
"Red ink in the cattle feeding business has turned from a headwind into a full force derecho due to high feedstuff costs. (A derecho is defined by meteorologists as widespread thunderstorm spawned straight-line damaging ground winds of up to 100 miles per hour that lasts for hundreds of miles.) Cattle feeders were hoping that lower feedstuff costs to help profits; but that has become increasingly problematic. The result has been much weaker calf prices and struggling heavy yearling prices. Calf prices have been pressured more than heavyweight yearlings by the confluence of drought impacts on both pastures and feedstuff costs.
"The LMIC has been estimating monthly cattle feeding returns since the mid 1970's based on feeding-out a 750 pound steer at a commercial feedlot in the Southern Plains. For steers sold in July of this year on the cash market, an average quality steer lost more money than ever before, over $250.00 per head. The largest losses before last month were in late 2008 and early 2009 at about $230.00 per steer. High feeder cattle costs and surging feedstuff costs during the feeding period greatly compounded what were most likely going to be unprofitable cattle from the time they entered the feedlot. At least well into the fall quarter of this year, red ink will continue on fed cattle sold.
"Calendar year 2012 will be the worst ever for cattle feeders, as calculated by the LMIC. Assuming the same number of cattle are sold every month, losses in 2012 will probably exceed $140.00 per steer eclipsing 2008's disaster (-$126.00). Of course, many cattle feeders do much better than the LMIC calculations using superior management and marketing, including risk mitigation. Still, nobody will be unscathed this year. The level of red ink in 2012 will provide a headwind for calf and yearling prices for a least a few more months."
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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