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Drought Snatches $100+ From Cow-Calf and Feedlot Returns

Drought Snatches $100+ From Cow-Calf and Feedlot Returns
Estimates remain for positive returns to cow-calf producers this year, but signicantly less than projections prior to this summer's unfolding drought.

“It is fair to say the drought of 2012 caused average returns for a cow-calf operation to decline by about $125/cow compared to the no-drought situation,” said analysts with the Livestock Marketing Information Center (LMIC) last week.

Early this year, record-high calf prices and expectations for a bin-busting corn crop had LMIC estimating 2012 cow-calf returns over cash costs and pasture rent at $180/cow, compared to $86/cow a year earlier. The most recent estimate is or a return of $57/cow.

LMIC analysts add, “Of course, producers in the most drought-stricken regions had even lower margins.”

Estimated feedlot returns are substantially worse.

Assuming a cattle feeder marketed steers every month, LMIC calculates the annual loss to be $150/steer, more than the previous record estimated loss of $126/head in 2008; and almost double the estimated loss of $88/head in 2011. To estimate returns, LMIC assumes a 750-lb. steer that is fed to finish. Costs are basis a commercial yard in the Southern Plains. Calculated returns include neither risk management nor price premiums.

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