Pressure Still on Feeder Break-evens

Break-even sale prices continued to ratchet up for cattle placed into feedlots during October due to higher feeder cattle prices.  In the Southern Plains, monthly average 700-to 800-pound steer prices in October were over $118 per cwt. in major markets.  That was the highest for any month since August 2004 and the second highest ever recorded.  Calculated break-even sale prices suggest red ink for most cattle closed out for the first several months of 2006.

Most slaughter steers sold in October lost money.  Based on placement of a 750-pound steer in a commercial Southern Plains feedlot, and considering all costs of production, negative returns of $50 to $60 per steer were common for October closeouts. 

Even with declining corn prices, break-even sale prices have moved up in recent months.  A 750-pound steer placed in a commercial Southern Plains feedlot in October and hits market weight in February has a estimated break-even sale price of $96 to $97 per cwt.