2009 is shaping up to be another year in which cow-calf producers will struggle to break even, but things should improve next year. After a long run of strong profitability in the cow-calf sector, producers generally saw negative returns in 2008 as production costs climbed and calf prices declined. This year doesn’t look much better, according to analysts at the
The group recently revised estimates for cow-calf returns lower to reflect lower than expected calf prices. For 2009, as calculated by the LMIC, many cow-calf operations in 2009 will not cover their cash production costs and returns will likely be similar to last year’s. The picture brightens, though, as LMIC predicts cow-calf returns will return to positive territory in 2010, as calf and cull cow prices rebound.
This year, input costs have remained relatively high, while calf prices have struggled. Calf prices are forecast to be slightly higher in the fourth quarter of this year than in 2008, but for the year, calf prices will still be the lowest since 2003. Currently, the LMIC estimated return for 2009 is around a negative $20.00 per beef cow. If realized, that will be the second consecutive negative year. Prior to 2008, the last time producers posted negative returns was in 1998.
Historically, estimated cow-calf returns vary dramatically over time. In the 36 years the LMIC has estimated cow-calf returns, including 2009, 15 years have posted negative cow-calf returns or 42 percent, with only nine of those years posted losses greater than $50 per cow.