Since then, the market has dropped at least 40-50c/kg, and in places, more. But that high-point started to deteriorate around three or four weeks ago. Livestock Marketing Information Center, accessed January 3, 2023.After the mini collapse in prices back in July/August when the market was spooked over FMD/LSD disease risk (see references below), there was a rally in paddock-based feeder prices to around 505-510c. Current breakeven and fed cattle price projections suggest that the cattle finishing sector will experience net losses in the first half of 2023.įocus on Feedlots, Animal Sciences and Industry, Kansas State University,, accessed January 3, 2023. Average cattle finishing losses in 2022 were estimated to be approximately $70 per head. This article discussed recent trends in feeding cost of gain, the feeder to fed cattle price ratio, breakeven prices, and cattle finishing net returns. Net return prospects could change rapidly. Due to the amount uncertainty related to the current market environment, our typical caveats apply to these projections. Combining these breakeven prices with Livestock Marketing Information Center (LMIC) fed cattle price projections results in expected losses in the first and second quarters of 2023. Breakeven prices for the first and second quarters of 2023 are expected to range from $162 to $165 per cwt. The breakeven price in the fourth quarter of 2022 was approximately $155. The average breakeven price for 2022 was approximately $149. Historical and breakeven prices for the last ten years, as well as projected breakeven prices through the December of 2022, are illustrated in figure 4. Specifically, the ratio is expected to range from 1.15 to 1.20 during the first half of 2023. Looking ahead, the feeder to fed cattle price ratio is expected to remain below the long-run average for the first half of 2023. Projected net return for the fourth quarter is a negative $40 per head. The high feeding cost of gain experienced in the second half of 2022 prevented this from happening. Typically, when the feeder to fed cattle price is low, the cattle finishing sector experiences strong net returns. In fact, the ratio averaged only 1.08 in the fourth quarter. Due to the detrimental impact of relatively high corn prices on feeder cattle prices, the feeder to fed cattle rate was relatively low in 2022. The average ratio for the 18 the months with a feeder to fed cattle price ratio that was above one standard deviation of the long-run average was 1.49. In contrast, the average loss for the months in which the ratio was above one standard deviation was $265 per head. The average net return for the months in which the ratio was below one standard deviation of the average was $108 per head. The feeder to fed cattle price ratio was one standard deviation below (above) the average for 17 (18) months since January 2012. Since January 2012, this ratio averaged 1.23. The ratio of feeder to fed cattle prices since January 2012 is illustrated in figure 2. Ratio of Feeder Prices to Fed Cattle Prices, Kansas Feeder to Fed Cattle Price Ratioįigure 2. Results are as follows: each 0.10 increase in feed conversion increases feeding cost of gain by $1.10 per cwt., each $0.10 per bushel increase in corn prices increases feeding cost of gain by $0.86 per cwt., and each $5 per ton increase in alfalfa prices increases feeding cost of gain by $0.59 per cwt. Regression analysis was used to examine the relationship between feeding cost of gain, and feed conversion, corn prices, and alfalfa prices. Feeding cost of gain for the first and second quarters of 2023 are expected to range from $140 to $143 and from $135 to $140, respectively.įeeding cost of gain is sensitive to changes in feed conversions, corn prices, and alfalfa prices. Using the mid-point of these projections, the estimated feeding cost of gain for 2022 is $127.50.
Feeding cost of gain for November and December of 2022 is expected to range from $137 to $140. Given the uncertainty in corn and alfalfa prices, this is not an easy task. Another way to answer the question is to project feeding cost of gain for the next several months and see how these values compare to feeding cost of gain for October. One of the ways to answer the question is to note that the projected cost of gain for cattle placed in October using the survey results presented in the Focus on Feedlot newsletter was $146.20. A natural question to ask is whether the October value represents a peak. This value exceeded the relatively high cost of gains experienced in early 2013. Feeding cost of gain in October, the latest month for which data were available, was $135.92. Feeding Cost of Gain for Steers, Kansasįigure 1 illustrates monthly feeding cost of gain from January 2012 to October 2022.
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