All in all, it’s been a good six and a half years for cattle feeders.
Data from the USDA’s Agricultural Marketing Service and the National Agricultural Statistics Service that was compiled, analyzed and published by the Livestock Marketing Information Center in Denver, showed that beginning with December 2016, there have been 64 profitable months versus 24 that were unprofitable in the Southern Plains.
The LMIC compared average monthly USDA fed cattle sales data with its own calculated breakeven levels for the months to come up with its profit/loss estimations.
SOME MONTHS VERY PROFITABLE
While many months showed small average per-head profits, over the period, the positive margins from feeding cattle were quite large, balancing some very unprofitable months in previous years. December of 2015, for example, showed average feedlot losses of $489.12 a head.
However, May of 2017 USDA data showed average profits of $457.43 a head. This was bookmarked by positive margins of $360.74 in April and $282.65 in June.
Last year also was a good one for feedlots. The USDA data showed that monthly per-head profits ranged from $74.33 to $406.88. Only December showed an average loss. This being $13.40 a head.
But the good times haven’t lasted. December 2023 through February of this year had cattle feeders losing money. The losses ranged from $13.40 a head in December to $114.86 in January.
MARGIN NARROWS
While the margin has narrowed and even gone negative for the last few months, it has the potential to regain positive footing yet this year.
LMIC calculations estimate cattle feeding breakeven prices to fall through June, opening the way for profitable outcomes for cattle feeders selling slaughter-ready cattle to packer buyers. March’s breakeven price was $184.71 a head versus an average Southern Plains fed cattle price of $186.00.
The estimated breakeven for April was $178.82 a head, and the calculated breakeven drops to $164.47 a head in June.
From there, the estimated breakeven price rises again to $180.32 a head in September. The LMIC made no further breakeven estimates.
However, the slump in the LMIC’s estimated fed cattle breakevens comes at a time when fed cattle prices are rising, opening the potential for a positive outcome for the feeders.
Plus, many market analysts see the declining US cattle herd beginning to show up in the feedlots in the form of smaller offerings to the packer buyers. If consumer and export beef demand can hold amid rising inflation, packer needs for fat cattle could underpin the cash cattle market and keep prices profitable into 2025, the analysts say.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $184.69 per cwt to $188.84, compared with last week’s range of $182.00 to $186.75 per cwt. FOB dressed steers, and heifers went for $286.69 per cwt to $292.18, compared with $286.41 to $290.67.
The USDA choice cutout Wednesday was down $1.82 per cwt at $296.67 while select was down $4.09 at $288.25. The choice/select spread widened to $8.42 from $6.51 with 113 loads of fabricated product and 32 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $348.75 per cwt, and 50% beef was $74.53.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.36 to $1.44 a bushel over the Jul corn contract, which settled at $4.58 1/2 a bushel, down $0.08 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $239.45 per cwt, down $0.08. This compares with Wednesday’s May contract settlement of $240.20, down $1.95.