The Livestock Marketing Information Center in Denver last week projected average annual 2019 prices for steer calves, feeder steers and fed steers in the Southern Plains to decline from last year before rising slowly through 2021.
The forecast was done using USDA Agricultural Marketing Service data, but was done without comment about why economists there came up with their forecasts.
The expected annual average price for 500- to 600-pound steers this year was $163 per cwt, down $9.58, or 5.55%, from $172.58 in 2018. Next year’s average annual price was projected at $168 per cwt, while the 2021 average was forecast to be $172.
The expected average annual price for 700- to 800-pound feeder steers in the Southern Plains was $144 per cwt this year, down $4.77, or 3.21%, from $148.77 last year. Anticipated average annual prices over the next two years were $147 and $150 per cwt, respectively.
For Southern Plains fed cattle, the average annual price this year was expected to be $116 per cwt, down $0.85, or 0.72%, from $116.85 last year, and followed by $117 next year and $120 in 2021.
Average annual prices for the three classes of Southern Plains cattle are a continuation of prices in 2012 and 2013. That was before a spike in 2014 and 2015. In the spike years, calf prices jumped to $244.64 and $248.58 per cwt, respectively, from $167.91 in 2013; feeder steer prices rose to $205.21 and $207.32, respectively, from $148.45 in 2013, and fed cattle prices climbed to $154.33 and $147.61, respectively from $125.47.
2019 CATTLE FEEDING RETURNS SEEN NEGATIVE
The LMIC estimated that cattle feeders would lose about $12.07 a head on unhedged fed cattle sold to packing plants this year. This would be down from a positive $19.90-per-head profit last year and down from a $170.82-per-head profit in 2017.
Those estimations came from figuring a 750-pound steer being fed to finish weight and fatness.
It turns out that feeding cattle without being hedged is the least profitable part of the cattle-to-beef business, if USDA/AMS analysis is to be believed. In all the years going back through 1990, unhedged cattle feeding has been profitable only six times.
The largest average annual profit was in 2014 when it was $274.68 a head, followed by 2017’s $170.82, then 2003’s $100.88, 2010’s $31.04, 2018’s $19.90 and $2005’s $7.05.
COW/CALF RETURNS GOING SOUTH
Cow/calf producer returns this year were expected to be even more negative than they were last year. The LMIC estimated that these producers would lose an average of $42.75 a head on each calf sold this year, down from a loss of $18.85 last year and off from a profit of $75.25 a head in 2017.
The largest year of cow/calf profits by far was in 2014 when it was $534.46 a head, and the largest loss was in 1996 at $89.55.
CATTLE, BEEF RECAP
Cash cattle changed hands last week at $108 to $112 per cwt on a live basis, steady to up $3 from the previous week, while dressed-basis trading was at $173 to $175, up $1 to $3.
The USDA choice cutout Monday was up $2.09 per cwt at $220.13, while select was up $1.40 at $194.44. The choice/select spread widened to $25.69 from $25.00 with 67 loads of fabricated product sold into the spot market.
Twenty-one steer contracts were posted Monday at zero for delivery against the Oct contract, along with 10 steer retenders at 1.
The CME Feeder Cattle index for the seven days ended Friday was $145.696 per cwt, up $0.37 from the previous day. This compares with Monday’s Oct contract settlement of $143.42, down $0.07.