Optimism for cattle feeding returns dwindles

Cattle feeding breakevens soared for cattle positioned in July, in line with the Livestock Advertising and marketing Info Middle (LMIC). Cattle that shut out in January will want an estimated closeout worth exceeding $188/cwt. to generate income.

Feeder steer costs have been the first drivers to the cattle feeding return breakevens’ regular climb, LMIC famous. Feeder steers in Dodge Metropolis have elevated since December of final yr, leaping from $172 to the $180s, then the $190s, and are actually at $242/cwt. in July, a 40% enhance in eight months. Throughout that point, breakeven costs have elevated 27%.

On a per head foundation, LMIC estimated returns have been as excessive as $400/head earlier this summer time, however July’s closeouts dropped almost $100/head as a result of increased prices, virtually all of which will be attributed to the rise in feeder worth. Nonetheless, returns are anticipated to be greater than $300/head in July, and the outlook is for optimistic returns to proceed.

By way of the remainder of 2023, LMIC estimates breakevens to be between $150/cwt. and $176/cwt. The futures market has most contracts forward of breakevens by $10 to greater than $20/cwt, making certain that cattle feeding returns will probably be worthwhile in 2023. LMIC is estimating the common per head return yearly will likely be near $250/head, just like the 2014 common.

The outlook for subsequent yr, nevertheless, is just not as optimistic, LMIC mentioned, with breakevens surging to $188/cwt. That is very near the present futures Dwell Cattle February contract worth of $189/cwt. April’s Dwell Cattle contract presents a bit extra respiration room at $191/cwt., however that may imply feeder cattle costs might want to stabilize if cattle feeders are going to return to income seen in 2023.