Fed-Cattle Market Hits Record High During July

It’s a rarity for the fed-cattle market to mount much of a rally in July, much less a $7 rally in just two weeks, but that’s exactly what’s happened since mid-month.  In fact, July 2003 will go down in the record books.  Not only did the fed market average the highest in history for any July, fed cattle also were more profitable on average than any other July.  The $7 rally in the fed-cattle market the last two weeks did a lot to help both the monthly average and the overall profits for the month. 

July is not typically a month that the cattle feeding industry looks forward to.  It is a month typically fraught with market and profitability challenges.  In fact, July has historically offered little more than a 1 in 3 chance of making money on fed-cattle. 

Prior to 2003, the 10-year average of July fed-cattle profits and losses stood at -$36 per head.  This year the average profit is close to $90 per head, on the heels of a $90 average during June. 

Just to put a little more perspective around these numbers, since 1981 there have only been two occurrences during any June, July or August when fed-cattle profitability was better then the last two months.  Those occurred in June 1982 when average profits approached $108 per head and in June 1987 when profits averaged nearly $135.  

Breakeven levels are set to move higher during August and then climb through the remainder of the year;  profit levels may decline slightly unless the fed market continues to move higher throughout the fall.  Even if profit margins shrink slightly in the coming months, 2003 in total is likely to be one of most profitable years in cattle feeding history.  The only year that will likely remain out of reach is 1987, when cattle feeders averaged right at $100 per head profit.  

Year-to-date, the cattle feeding industry has made $1.1 billion and is on track to erase all the losses that have mounted the past five years.  When it’s all said and done, tip your hat to June and July and hope the market treats the industry as well in the coming months.