In a Livestock Marketing Information Center letter called In The Cattle Markets, University of Florida Extension Beef and Forage Economist Hannah Baker looked at the economics of a cow/calf producer, concluding things looked good for now.
In a Southern Ag Today article, the trends in farm operating costs over the last few years were discussed based on data released by the USDA Economic Research Service in May. The article focused on row crops, but the data included operating costs for cow/calf production, Baker said.
PER HEAD COSTS UP 29%
Over the last five years, cow/calf operating costs per head increased by 29% nationally, according to data from the ERS and LMIC. The 2015-2024 average, annual operating costs for a cow/calf operation were $602.53 per head, not including pasture rent, according to ERS survey data.
That average was 14% lower, 19% lower, and 14% lower than estimated operating costs in 2024 of $689 per head, 2023 of $715 a head, and 2022’s $690 per head, respectively, Baker said. The forecasted total of cash operating costs and pasture rent for 2025 was $1,059 a head and $1,044 per head in 2026, according to the LMIC. These forecasts were slightly less than the estimated total costs in 2024 of $1,069 per head.
INPUTS RISE
Baker compared total operating cost estimates from nine USDA, ERS Farm Resource Regions that included total feed costs (purchased, harvested and grazed), backgrounded cattle, veterinarian and meds, bedding/litter, marketing, custom services, fuel, lube, electricity, repairs and interest. According to the data, all increased in 2024 except total feed costs, fuel and interest.
Total feed costs were down, but the cost of grazed feed was 4% higher year over year, which she assumed was because of fertilizer prices. Interest was slightly lower year over year but was still 86% higher than the five-year average on a per head basis.
While declines and fluctuations have been seen in input costs like feed, fuel and fertilizer over the last year in most regions, global dynamics will continue to play a role in the cost of inputs throughout the rest of 2025 and into 2026, Baker said.
FEEDER PRICES UP
The cattle industry has been experiencing record-high prices for cattle, which is influencing larger profits, she said. The forecast for the next couple of years was that cow/calf producers can expect to continue experiencing high returns because of tight supplies and strong consumer demand.
However, Baker warned that even with slight declines forecasted for the future, it was still important to manage input costs and marketing strategies regardless of how large the revenue stream may be.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $233.00 per cwt to $241.92, compared with last week’s range of $230.88 to $241.92 per cwt. FOB dressed steers and heifers went for $365.34 per cwt to $375.00, compared with $361.69 to $379.55.
The USDA choice cutout Wednesday was down $2.20 per cwt at $361.99 while select was down $1.57 at $340.91. The choice/select spread narrowed to $21.08 from $21.71 with 145 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $420.07 per cwt, and 50% beef was $190.40.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.45 to $1.60 a bushel over the Sep corn contract, which settled at $3.91 3/4, up $0.02 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $333.03 per cwt, up $0.83. This compares with Wednesday’s Aug contract settlement of $338.95, up $2.75.