Beef Buzz News
Profitability May be Just Around the Corner for Feedlots, LMIC Director Says
Mon, 29 Apr 2013 17:25:21 CDT
Jim Robb talks to Ron Hays about mainly positive news in feedlot country.
Jim Robb, Director of the Livestock Marketing Information Center in Denver, indicates that the “break-evens” for the feedlot industry are finally moving in a positive direction.
“I think that really is an important turning point in our monthly calculations for the month of March. Corn prices have moderated some, especially late in the month and into April, but feeder cattle prices have had 23, 24 months of consecutive losses in our calculated numbers on cattle feeding returns. We seem to be turning a bit of a corner. We had a little bit softer on the corn market, but, importantly, we’ve had some ratcheting down in feeder cattle prices and really bringing those much more in line with the level of cattle feeding returns and profitability.
“In fact, for the last several days as we’ve calculated these up, they’ve continued to decline and our break-evens for cattle placed in early April are in the upper 120s per hundredweight. That includes all costs of production--much more realistic than we had just a few weeks ago when we were in the mid-130s and, at the beginning of March, we were in the lower 140s per hundredweight.
“So there is really a bit of a sea change going on, kind of a rationalization of the feeder cattle market. Hopefully we get a little more help on the cash corn side. And this will come together where we will be much closer to break-evens.
“The break-evens, now, are the lowest we’ve calculated since January 2012. So I think this is worth noting. And worth noting that the markets are adjusting and there is a bit of a light at the end of the tunnel, especially on the cattle feeding side and especially if we can get a decent corn crop here in 2013.”
Robb says that he believes there is a strong possibility that profitability will return to feedlots this summer.
“It’s certainly a much-different picture than a year ago and, really, a different picture than six weeks or so ago. “
Robb says disappointing exports to the Japanese market due to the value of the yen against the dollar means more beef will need to be absorbed domestically.
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