Tough Spring for Feedyards

The spring feeding season was difficult for cattle feeders.  High feeder cattle prices combined with higher feed grain prices and lower fed cattle prices left returns deep in the red.  Red ink will continue on summer closeouts.

Since February, most slaughter steers that were sold lost money, with the largest losses incurred in May.  Based on the placement of a 750-pound steer in a Southern Plains commercial feedlot and taking into account all production costs, the estimated closeout return in May was just over a negative $153 per steer.  Two fundamental factors combined to cause large losses for May closeouts: 1) declining slaughter cattle prices, which fell below $80 per cwt. for the first time since February 2004; and 2) high feeder cattle prices.

Breakeven sale prices for slaughter steers this summer and fall are below a year ago due to lower feeder cattle prices.  The next opportunity for positive cash cattle feeding closeouts will likely be during the fall (e.g. November or December).