The market’s current value ($215/cwt.) equates to over $1,600/head and mandates an investment in excess of $100,000 to fill a truck.

Nevil Speer

July 2, 2014

2 Min Read
Industry At A Glance: Annual Feeder Cattle Investment
<p>cattle, industry, balance, value, truck, investment</p>

At this time last year, Rabobank released a new report regarding the status of rebuilding the cowherd. Entitled “North American Beef: The Liquidation Continues,” one of the most important comments within that report stated that, “…before the U.S. cattle industry can begin to fully rebuild after several years of contraction, it is necessary for equity recovery to take place in the cattle feeding sector.” Some of that is occurring now with the market’s recent run.  

However, higher prices are a double-edged sword. On one hand, they mean more revenue coming into the feeding operation; on the other hand, they also mean greater capital investment to procure feeder cattle. The market’s run of late has been especially strong on the feeder side of things.

Subscribe now to Cow-Calf Weekly to get the latest industry research and information in your inbox every Friday!


cattle, industry, balance, value, truck, investment

To get some sense of the impact of the market’s influence, the accompanying graph above represents the equity investment on a per-head basis over time. The market’s current value ($215/cwt.) equates to over $1,600/head and mandates an investment in excess of $100,000 to fill a truck.

Clearly, this is increasingly a high-stakes game. Cattle feeders have to operate with great discipline in their purchases. Buying future replacements will have to be managed very carefully in an effort for feedyards to rebuild and maintain some equity. 

How do you see the ever-increasing requirement for capital shaping the business in the future? Will it ultimately limit the ability for some to stay in business and further drive consolidation? If so, how might that influence the market over time and translate back into the cow-calf sector? Leave your thoughts below.  


You Might Also Like:

80+ Photos Of Our Favorite Calves & Cowboys

3 Things You Need To Know About Feeding Moldy Hay

BEEF VET: Here's When To Castrate Calves

5 Beef Industry Experts Predict The Beef Industry's Future

About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

Subscribe to Our Newsletters
BEEF Magazine is the source for beef production, management and market news.

You May Also Like