Economic outlook improves for cattle feeders

Economic outlook improves for cattle feeders

Declining premiums of feeder cattle to fed cattle promise to boost cattle feeding returns say analysts with the Livestock marketing Information Center (LMIC).

“Feeder cattle prices (700-800-pound steers) have returned to much more normal price levels relative to those of fed animals,” say analysts with the Livestock Marketing Information Center (LMIC), in this week’s Livestock Monitor. “In the Southern Plains, the market premium last week was about $24 per cwt. compared to over $51 a year ago. The peak weekly premium last year was over $82 per cwt.”

LMIC analysts explain last year’s extraordinary premium level overwhelmed relatively inexpensive feed costs. It also contributed to slower fed cattle marketing.

“The very high cost of cattle to go on feed to replace traditionally market-ready animals was a major contributor to the slow marketing rate in 2015, which was a driver of the cattle price collapse last fall,” LMIC analysts explain. “…In recent months, incentives to delay marketing of finished cattle and create associated problems have dissipated significantly.”

Using recent prices for steers weighing 700-800 pounds, LMIC estimates breakeven prices for steers marketed in the coming months to be less than $130 per cwt, the least since October of 2014.

 

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