Economic indicators: Cattle prices rally, margins don’t

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click image to zoom Significant price gains for all classes of cattle were found throughout the month of September. The surge was enough to turn our overall arrow from down to sideways, but ominous signs remain. Improvements were also found in production costs as grain prices eased back off record highs. Average cost of gain, however, continues to increase, keeping cattle feeding margins well below breakeven. Packer margins have also eroded deep into the red. Supplies of market-ready cattle continue to decline, lending support to ideas that cattle prices could move higher. The arrow for the beef market indicator turned up this month with higher boxed-beef prices and increasing movement of product. Analysts believe 2013 is shaping up to be a banner year for cattlemen as tightening supplies of all classes of cattle will drive prices higher. All livestock producers will struggle with higher production costs.

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