Red ink was the story for cattle feeders in 2006, Livestock Info Marketing Center (LMIC) analysts say (www.lmic.info/). Meanwhile, many cow-calf operations did rather well in 2006, despite widespread drought, higher production costs and lower cattle prices.
LMIC analysts expect cattle feeders to better the dismal results of 2006, while cow-calf returns in 2007 may be near those of 2006 if corn prices stay under control.
"In 2006, annual average cattle feeding returns based on all production costs and feeding in a commercial Southern Plains feedlot were the worst on record (LMIC estimates go back to 1975). Average monthly losses per steer sold in calendar year 2006 were about $75/head. For the year, only three months had positive returns (January, August and September) and five sale months had losses exceeding $100/steer," LMIC reports.
Meanwhile estimated cow-calf returns over all cash costs of production, plus pasture valued at rental rates, remained positive in 2006, reporters say. But those returns declined significantly from 2005, thanks to higher production costs and lower prices for calves and cull cows. In the Southern Plains, LMIC estimated returns over cash costs plus pasture rent were about $48/cow, the lowest cow-calf return since 2002, and $87 less than 2005. In the LMIC-calculated cow-calf returns, the last negative returns year was 1998, the report says.
To make money in 2007, cattle feeders will need to put a sharp pencil to their cattle-buying decisions, and stay atop feedstuff costs much more than in recent years, LMIC says.
While cow-calf operations will face lower calf prices in the new year, cull cow prices are expected to strengthen.
"With normal weather, cow-calf production costs will at least stabilize in 2007 and could even be a little below 2006's in many regions. Still, cow calf returns will be similar to 2006's and well below the profit levels posted in 2004 and 2005," LMIC reporters say.
-- Joe Roybal