Cattle Feeding Still Bleeds Red Ink

Even though feed costs are significantly lower this year than last, cattle feeder are still struggling to find profit on

Even though feed costs are significantly lower this year than last, cattle feeders are still struggling to find profit on average.

In fact, Livestock Marketing Information Center (LMIC) analysts noted last week that projected cash returns for 2009 will be the second poorest on record – last year was the worst.

“After the first quarter, the average per-head loss on steers did moderate and continued to do so through the early summer,” explain LMIC analysts. “However, losses have increased the last few months with the estimated steer returns in the red by about $69/steer for the third quarter of 2009, still much smaller than the well over $100/steer losses posted earlier in the year. Estimated losses for average-performing cattle in feedlots are forecast to continue for the balance of the year.”

LMIC’s estimated average feedlot returns are based on feeding out a steer with an in-weight of 750 lbs. placed in a Southern Plains commercial feedlot. The estimate includes all production costs incurred by the feeding operation. In January, the estimated feeding loss was nearly $230/steer, which nearly matched the record loss posted last December.

By April, feedlot returns had improved to a loss of about $28/steer, but LMIC analysts note the decline was short-lived as feeding losses increased to a negative $50/steer in October. For the January-October period, feeders lost an average of $89/steer vs. a loss of $110/steer for the respective period last year.

“Estimated breakeven sales prices for 750-lb. steers placed into a Southern Plains feedlot to be marketed during the balance of 2009 will remain in the low $90s/cwt.,” say LMIC analysts. “However, estimated breakevens have declined in recent weeks. Steers placed in October that will reach market weight in February have estimated breakevens of about $87/cwt., based on recent feedstuff costs in the Southern Plains.”