Cattle feeders have closed most of their pens out in the black over the past three months, but are likely to see margins tighten on cattle they market later this spring. Kansas State University Extension Livestock Production Economist Rodney Jones says fed-cattle prices likely will drop off from their recent highs later this spring and into the summer. At the same time, higher feed costs and weather-related performance losses could drive breakeven prices higher.

Dr. Jones projects breakeven levels around $72.75 to $73.75 per hundredweight for late-February placements of 750-pound steers and 650-pound heifers scheduled to finish in July. Feed ingredient prices have increased slightly, he notes, but February placements also should post better feed conversions and average daily gains compared with cattle marketed this spring.

Combining the ration charge projection with February placement performance expectations, Dr. Jones projects feeding costs of gain of $47.59 per hundredweight for February steer placements, and $50.18 per hundredweight for February heifer placements. He notes that based on winter performance estimates, each $0.10 per bushel change in corn price changes feeding cost of gain by $1.36 per hundredweight. Each $10.00 per ton change in hay prices changes feeding cost of gain by $0.54 per hundredweight. Feeding cost of gain changes by $0.56 per hundredweight for each 0.10 pound change in feed conversions and $0.08 per hundredweight for each 0.10 pound change in daily gains.

Dr. Jones estimates that the average December steer closeout in Kansas generated a profit of about $39.39 per head. Breakeven prices averaging about $73.62, combined with a monthly average selling price of $76.73, generated the positive returns. He notes that early estimates suggest even better profits on closeouts during the first two months of 2001, averaging $60 to $70 per head. Breakevens on March closeouts are around $73.50 to $74.50 per hundredweight, with selling prices topping $80.00. Dr. Jones expects those profits to decline by summer, as futures-based price forecasts suggest significant declines in fed-cattle prices.