Economic Indicators: Profits elusive for feeders, packers

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click image to zoom Average monthly prices for all classes of cattle were higher during December, despite continuing concerns over a two-year drought. Supplies of yearling cattle have become increasingly tight, which provides underlying support to prices. Most analysts believe prices could surge higher if grain prices drift lower.

Feedyards are struggling with heavy losses driven by high feeding costs and high feeder cattle costs. Feedyards have now seen negative margins on closeouts for nine consecutive months. Packers are also losing money and many fear retail beef prices are high enough to discourage consumer purchases. Production costs increased modestly during December and the steer-corn ratio declined slightly. Pork and poultry remain competitive as their production held steady and retail prices were fl at during the month. Calf and yearling prices will remain strong throughout the coming months as supplies continue to dwindle.

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