Cow-calf producers are enjoying the most profitable season they've seen in nearly a decade, and next year promises to be just as good. Strong prices for feeder cattle and calves are the driving force behind ranch prosperity, and tight supplies of cattle coupled with strong consumer demand for beef products should support the market through 2001.

According to data collected in Drovers' 50-market auction summary, stocker and feeder cattle prices averaged 13 percent to 17 percent higher this year than during 1999. Steer calves 400 to 500 pounds averaged $104.42 per hundredweight through November of this year. That compares with the 1999 average of an even $90 per hundredweight, an increase of 14 percent. And prices for that class of steers are up 19 percent over the 1998 annual average of $84.80.

Feeder steers weighing 600 to 700 pounds averaged $88.25 per hundredweight through November 2000, which is 13 percent higher than last year's annual average of $76.63. And this year's price is 17 percent higher than the 1998 average of $73.20.

Prices for heifers have seen similar increases. Heifer calves weighing 400 to 500 pounds averaged $94.08 per hundredweight through November, an increase of 17 percent over last year's $79.44, and a whopping 21 percent over the 1998 average of $74.40. Yearling heifers weighing over 600 pounds ended November with an annual average price of $79.52 per hundredweight, which is 13 percent higher than the 1999 average, and 17 percent ahead of the 1998 average of $65.63.

However, escalating stocker and feeder prices are not welcomed by all producers. Cattle feeders are struggling to put together packages of cattle that can turn a profit. But current projections show prospects are little better than break even. A 750-pound feeder steer bought this week at $90 per hundredweight puts initial cost at $675. Cost-of-gain for 400 pounds at 44-cents per pound adds $176 to the total. Interest will add another $20.88, for a total of $871.88 per head. That means the steer will need to sell for $75.80 at harvest next spring to break even.

Prices on the Chicago Mercantile Exchange suggest feeders can lock-in a breakeven. At the time of this calculation, April Live Cattle futures were trading at $75.73, which would return a profit of about 99-cents on our projection.

Given the losses feedyards have experienced this year, many may be reluctant to lock in a break even at this early date. Market outlooks suggest prices may strengthen for fed cattle next spring, so many cattle feeders may take a wait-and-see approach to price protection.

Cow-calf producers should hope cattle feeders find decent profits next year. If feedyard losses in 2001 match those of this year, feedyards will be under tremendous financial pressure. And that would mean they'll be looking hard to buy replacement cattle at cheaper money in 2001.