Of feed and feeders: Strange times in the cattle business

摘要

It is a rare event when both record high weaned calf prices and record high feed costs occur at the same time. This combination is rare because the combined cost of replacement cattle and of feed represents approximately 85 percent of cattle feeding costs in feedlots. So it is more common that feeder and feed prices do a pas de deux where feed costs lead and feeder prices respond in the opposite direction. The present situation of simultaneously high feed and feeder costs started to develop in the fall of 2010 when weaned steer calf prices advanced 22 percent over the previous year and feed costs declined only seven percent. That was followed by a further 20 percent advance in feeder calf prices in the fall of 2011, combined with a 21 percent increase in feed costs. The predictable result has been a prolonged period where market prices for finished cattle have fallen well below breakeven levels. Unless the cattle were hedged or the risk was managed in some other way, large losses occurred.