Feeder cattle review: Feedlots losing money with high feed costs

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Compared to last week, steer and heifer calves sold steady to 3.00 lower with the exception of the Interstate-70 corridor from eastern Colorado across through Kansas and Missouri where prices trended steady to 3.00 higher.  Limited supplies of true yearling feeders and longtime weaned calves over 650 lbs traded with a higher undertone, except for Southern Plains direct markets which were dominated by fleshier feeders coming out of growing yards. The best demand was noted from Midwestern and Northern Plains backgrounders who are now fully done with a disappointing harvest and looking for additional off-season profit opportunities. 

Last week’s cold front also boosted calf interest with widespread hard-freezes which eliminated most flies and many airborne viruses plaguing new calf purchases this fall.  Each week a larger percentage of the northern quality calves have now been weaned for at least 30 days and starting to reach the desired timeframe which is 45-60 days away from momma. 

Demand has grown progressively lighter for stocker calves near the grazing wheat regions of Texas and Oklahoma as the cooler temperatures and the lack of moisture has spoiled most dry-land wheat pasture prospects with some cattlemen now interested in selling their pre-conditioned stockers that they put together for once promising forage.  This also affected the Southeastern calf markets, especially on pee-wee calves under 450 lbs which (for the first time in recent memory) suffered sharper losses than the heavier calves with some areas quoting featherweights as much as 10.00 lower. 

Friday’s cattle-on-feed report was well anticipated with the average of analyst’s predictions coming within two-tenths of a percentage point in all three categories.  November 1st inventories were 94.7 percent of the same time a year ago with placements only 87.5 percent and marketings 102.8 percent of the same period in 2011.  Despite the bullish appearance of the data, the market is not expected to receive a major shot in the arm.  The industry is fully aware that feeder cattle numbers are extremely tight (the lightest placement total since the data series began in 1996) and on-feed inventories are lightening.  It’s just that carcass weights have been so heavy (October saw the highest weekly average steer carcass weights on record with the heaviest recorded weight of 880 lbs occurring twice) that tonnage is making up for headcounts. 

Despite outstanding performance, feedlots are losing money and sky-high feed costs are inevitable until at least this time next year.  Fed cattle sold steady to 1.00 higher from 125.00-126.00 and steady to 2.00 higher in the meat at 196.00.  This week’s reported auction volume included 39 percent over 600 lbs and 41 percent heifers.



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peter rano    
Oklahoma  |  November, 17, 2012 at 09:56 AM

THis report by Corbit is spot on please keep in on the web site


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