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Cattle Feeding Red Ink

Last year was not a good year for U.S. cattle feeders and so far 2009 has continued that trend.

Last year was not a good year for U.S. cattle feeders and so far 2009 has continued that trend, says the Livestock Market Information Center. Cattle feeders continued to post significant losses in the first quarter of this year, as low fed cattle prices were not covering cost of production. Although, the average per head loss on steers sold did decline as the quarter progressed, estimated steer returns were in the red by about $160 per head for the first quarter of 2009. Estimated losses for average performing cattle in feedlots are expected to continue into the summer months, but above average performing cattle sold beginning in April will make some money.

LMIC estimates for average feedlot returns are based on feeding out a 750-pound steer placed in a Southern Plains commercial feedlot, including all production costs incurred by the cattle In January, estimated feeding loss was nearly 230.00 per steer, nearly matching the record loss posted last December (LMIC estimates began in the mid 1970’s). In February, feedlot returns did improve to a negative $150.00 per steer and continued to ebb into March at an average loss of about $105 per steer. So, for the quarter feeders loss of about $160.00 per steer was essentially the same as posted during the first quarter of 2008.

Estimated breakevens for a 750-pound steer placed into a Southern Plains feedlot to be sold in April are about $90.00 per cwt. Looking ahead, breakevens will decline with estimated steer breakeven sales prices ranging from the mid $80s to $90 per cwt. through July. However, estimated breakeven sale prices began to increase again in early April along with the run-up in feeder cattle prices. Many feeder cattle currently being placed into feedlots will only make money if corn prices decline significantly from current levels.

For related articles, link to the Livestock Market Information Center.