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Cattle Feeding Returns Surge

Cattle Feeding Returns Surge

6/19/2017 5:59:00 AM/Categories: General News, Today's Top 5, Livestock

The Livestock Marketing Information Center (LMIC) has been estimating monthly cattle feeding returns for commercial Southern Plains feeding since the mid 1970’s. There can be lots of debate/discussion of the calculation assumptions made in estimating returns (LMIC’s are not based on surveys of producers). 

LMIC’s were developed to facilitate market analysis and the assumptions are rather fixed, for example the animal being fedout is always a 750-pound steer. Monthly average cash market steer prices reported by USDA-AMS (Agricultural Marketing Service, Market News Division) are used. Results provide a barometer (e.g. year-over-year direction of change) of returns above all economic production costs.

Estimated returns surged for cattle sold during the first five months of 2017. After posting record large losses in 2015 and continuing to gushing red ink during most of 2016, January through May of this year were the best consecutive five months ever. The prior five month record high was set in late 2003. Profitability has been due to modest feedstuff costs, large year-over-year drops in feeder cattle prices, and strong fed cattle prices.

On a monthly basis, fed cattle sold in May had the second highest profit level ever in the LMIC calculations, barely behind October 2003’s. May’s return was over $270.00 per steer above a year ago. For the month of May, in percentage terms compared to a year ago, closeouts margins were increased by a 6% drop in feedstuff cost, 15% decline in feeder steer cost, and a 6% increase in slaughter steer sales price per cwt.

Cattle feeding profitability has allowed producers to aggressively buy feeder animals. The result has been higher feeder cattle prices and more steers and heifers placed on-feed than a year ago. Stronger feeder steer prices have raised breakeven sale prices for cattle feeders. Steers put on-feed in May had breakeven sale prices at well over $120.00 per cwt., the highest in 10 months. Monthly Cattle on Feed reports from USDA-NASS show the number of cattle placed into feedlots during the first four months of 2017 was the largest for that timeframe since 2000. 

Source: Drovers

Photo Credit: Flickr

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