Iowa State University livestock economists John Lawrence and Shane Ellis share their expertise with this month’s cattle market outlook column.
Tight beef supply supports cattle market in economic recovery
It is an understatement to say that it has been a difficult time for cattle feeders. Fed cattle prices traded below $80 in late February for the first time since July 2006. Estimated returns for fed cattle sold in December and January were a loss of more than $200/head, the largest in history. Breakeven for a 650 lb. steer placed in early March at $102 and $3.25 corn is in the mid-$80s range and the hedge potential is in the low $80s. Thus, feeder cattle prices that have weakened since last fall may have to decline further before feedlots return to profitability.
The supply side of the beef market is favorable for higher prices. Cattle on feed numbers were 6 % lower than the year before in February. The number of feeder cattle available for placement is higher than last year’s record low level and is the second smallest supply of available feeder cattle in modern history. Beef-cow slaughter is running close to 2008 levels after being lower during the early winter. Dairy-cow slaughter is and will continue to run higher than last year’s levels due to low milk prices. In summary, domestic supplies of cattle and beef are expected to be lower than 2008 levels through at least mid-year…
Want to read more? For Lawrence and Ellis’s complete column, click here.
Have a marketing question? Contact Lawrence at 515-294-6290 or email@example.com.