Cattle feed yards in the Texas Panhandle and elsewhere have been operating at a loss for 18 months, and while many would like to sell their sprawling operations, there are either no buyers or no banks willing to provide financing, industry observers say.
Easing grain prices have lowered feed costs, but in the recession, consumers continue to show low interest in beef, punishing the industry, said Don Close, market director of the Texas Cattle Feeders Association in Amarillo.
Wholesale demand for beef has dropped 9 percent in the last nine months, compared to the same period the year before, Cattle Fax reported in July.
"We had extremes through the spring of losing $150 on every head," Close told the Star-Telegram. "With lower corn costs, the average is now a loss of $50 a head."
Remarkably or not, the number of feedlots closing is relatively few — mainly operators who were too small to efficiently compete, poorly hedged on cattle futures, or located in fringe areas like New Mexico who had to pay higher transportation costs, said Kevin Good, a market analyst with Cattle Fax, a news and research service that tracks industry trends.
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