Beef prices softening:Current price decrease a necessary adjustment

摘要

Prices have softened for all classes as the beef cycle does its thing -growing inventories will mean lowering prices for the year.While prices are still very strong, we have left the heady days of $3 feeder calves and $2,000 cull cows. Spring prices for decent feeder calves have hovered in the $1,000 area, still profitable for the great majority of cow-calf producers. The current price decrease is a necessary adjustment given the steep losses inflicted on the feedlot sector. Even with feeders trading for $500 less than this time last year (and through to fall 2015), finished cattle marketed now are still in the red by close to $ 100/head. Not fun. Simply put, feeder calf prices in 2015 were not sustainable given the drop in finished cattle prices. Put another way, local rail price one year ago was $3.30/lb, this week it is $2.51/lb, a difference of 79 cents per lb or $632 on an 8001b carcass. The vast majority of the t difference has been bid out of the feeder calf. This increase in feedlot margins has enabled some feedlots to return to feeding cattle.