Feedlots Could Find Path to Profitability in 2021

WEST LAFAYETTE, IN – COVID-19 and fluctuating fed cattle and feed prices resulted in another challenging year for cattle finishers.

According to Dr. Michael Langemeier, Economist with the Center for Commercial Agriculture at Purdue University, average cattle finishing losses in 2019 were estimated to be approximately $80 per head and losses for 2020 are projected to be $75 per head.

However, current breakeven and fed cattle price projections suggest that net returns may close in on breakeven prices by July – minus any Coronavirus Food Assistance Program (CFAP) payments.

Feeding cost of gain averaged $84 per hundredweight in 2019, and in 2020 slipped to $83 in the first quarter and $84 in the second quarter.

Feeding cost of gain for the third quarter averaged $78 and is expected to average close to $80 for the fourth quarter again

Gains in corn prices in recent months, are increased the projected feeding cost of gain for the first quarter of 2021 ($85 per hundredweight) with the largest gain occurring in March.

Breakeven prices for the first half of 2020 averaged $119 but slipped to $109 in the second half of the year.

Breakeven prices for the first half of 2021 should average $119, with losses ranging from $75 to $100 in the first quarter, and net returns close to breakeven during the second quarter of 2021 but net return prospects could change rapidly, Langemeier says.

More information is available at Farmdoc Daily.
(SOURCE: All Ag News)