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CME: Toll Taken by Wet Weather, Muddy Conditions in Feedlots

02 August 2019

US - Metrics on cattle feeding operations performance for June has been published by Kansas State University in recent days. The overriding theme continues to be the toll taken by wet weather and muddy conditions in feedlots during the winter and spring, according to Steiner Consulting Group, DLR Division, Inc.

Days on feed, feed per pound of gain and average daily gain were all worse than in the prior five years. All of these measures are critical to the feedlot profit situation.

The Livestock Marketing Information Center (LMIC) utilizes these inputs in a pro forma calculation of feedlot profitability for the Southern Plains region. Based on this data, feedlot profitability for steers was negative during July by $16 per head. This compares to a $60 per head loss in June and a $40 loss in July 2018.

Losses were moderated by a slight increase in Choice cattle prices from June to July (the first increase since March) and a downward trend in total cost per head (a trend that started in April). The variation in monthly profit this year has been the least since 2014.

The amount of feed used to produce a pound of steer is moderating back to the level seen in past years, but the feed conversion in June was still 6 percent higher than a year earlier. Mid-June feed prices were slightly higher than a year earlier, as corn prices were up 2 percent while ground alfalfa hay prices were about the same.

The average cost of gain in June, according to the Kansas State University, was $84.45 per cwt, up from $76.72 in June 2018. The elevated cost of gain was due to alfalfa hay prices that were 10 percent higher during the feeding period this year than a year earlier, as well as the less efficient feed conversion by steers on feed. Corn prices were 2 percent higher this year than a year ago during the feeding interval.

The average feeding duration was moving higher in June instead of adjusting back to the shorter intervals of past years. This would be a factor leading to higher non-feed costs for feeding cattle. Two consecutive months (May and June) of $7 declines in Choice cattle prices could have been an issue discouraging the enthusiasm to market fat cattle. Overweight cattle were not a problem yet, given the slower average daily weight gains during the feeding period.

The projected cost of feeding a steer in June was $87 per head compared to $70.83 a year earlier. Higher death loss this year due to adverse weather had a bearing on this value. The projected cost of placed cattle in June was the highest since August 2015.


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