Cattle in the U.S. are now the fattest they’ve ever been, signaling an end to the seven-year run of record beef prices just as losses begin to mount for American feedlot owners.
Tom Fanning, who manages a feedlot herd of 30,000 in Buffalo, Oklahoma, says he loses $100 to $300 on each animal he sells to slaughtering plants, even though they are bigger and produce more meat than ever. Its worse for other producers. On average, industry losses began in December and ballooned to $420 a head this month, the Livestock Marketing Information Center estimates.
Cattle futures have plunged 22 percent from an all-time high a year ago as the U.S. herd began a long-awaited expansion and consumers switched to cheaper chicken and pork. That’s squeezed feedlot owners who buy year-old steers and raise them on a diet of mostly corn for more than four months. To ease the pain, operators like Fanning are taking advantage of ample, low- cost grain supplies by holding cattle for almost a month longer than normal, which means the animals get bigger and generate more revenue.
“It still makes economic sense to put on as many pounds as efficiently as you can” to minimize losses, said Fanning, 50, who has been managing Buffalo Feeders LLC for 15 years. His cattle spend about 150 days eating grain before they are sold, about 25 days more than two years ago, adding about four pounds of weight gain per day, he said.
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