Another miserable week left many in the cattle feeding business on the brink of financial ruin. Closeouts reveal an average loss of $681 per head, fully $70 per head worse than the week before, according to Sterling Marketing, Vale, Ore. USDA’s reported 5-area cash price last week was $118.52 per cwt., $5 per cwt. lower than the week before and $52.39 per cwt. short of breakeven.
“This unbalanced situation cannot be sustained in a market that will see 4% more beef, continued record pork production, and a likely 4% increase in chicken production during 2016,” says Sterling Marketing president John Nalivka. “Prices are aligning to a changed supply situation. Cattle weights will remain relatively high during 2016 with increased numbers as herds expand. While hog producer margins have turned red with significantly lower lean carcass values, this is not likely to cause a setback in continued herd expansion through most of 2016. Poultry production will increase, too. The result will be increased total meat supplies and lower prices and it will be noticeable for beef after 2 years of record prices, although prices are expected to generally remain above 2013 levels.”