Dr. Glynn Tonsor of Kansas State Says the Rising Tide of Red Ink in Feedlots is Becoming SignificantWed, 13 Jun 2018 10:12:39 CDT
When you look at current cattle prices, Dr. Glynn Tonsor of Kansas State University says feedlots appear to be losing money and will likely continue to lose money for the remainder of 2018. In a recent interview with Radio Oklahoma Ag Network Farm Director Ron Hays, he explained how this situation may play out for some feedlot operations - if they do not have any risk management protections in place that will help to minimize any losses feeders may be facing because of current cattle prices. At any rate, Tonsor says the flow of red ink in the feeding sector is significant.
“For steers, between May and September of 2018, projections are in excess of $100 losses and in the back end, so Q4 of 2018, we’re actually projecting the first two months of 2019 are between at $15 to $100 per loss,” Tonsor said. “Each of those presume a fed basis that’s zero to plus $2 to $3 depending on what month we’re looking at and we’ve had some recent months where basis has been $10 to $15.”
However, in the event things turn out that it is $5 stronger than he is currently predicting, Tonsor says 1,400 lb. steers could actually add basically an additional $70 of value to the sale price. In that case, he clarifies that prices may actually be closer to breakeven. Tonsor says, too, those feedlot operators with a risk management plan in place will actually have the opportunity to lose less money, perhaps even make a little. The key to all of this, though, is minimizing any potential hiccups in trade - which as we all know is something of a contentious issue at present with the current administration shaking things up in global commerce. Tonsor asserts that today’s ag industry is on track to have the ability to continue feeding a growing world population and remain profitable while doing it - but that all rests on the ability of nations with the advantage of being able to produce large amounts of food to export it to other countries where demand is strong. This is viewpoint is held universally, Tonsor says, who recently returned from the World Meat Congress held in Dallas last week.
“It is very clear that everybody, whether you come from Argentina, Canada, Mexico, the US, wherever you come from - recognizes the critical role of trade both from a producer as well as a consumer perspective on meat,” he said. “So, there’s a lot of reasons to be optimistic because growing global protein demand is a reason to be optimistic if you are a protein producer.”
Listen to Tonsor and Hays’ full discussion examining the current global meat market, on today’s Beef Buzz.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is 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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