Kansas State University’s “Focus on Feedlot” reports summarize monthly feedlot closeout data from participating commercial feedlots.  In the first two months of this year, feedlot data showed that steers sold had a cost of gain below $100 per cwt. for the first time since July 2011. Cost of gain for heifers sold in February also dipped below $100.00 per cwt. and was the lowest since May 2011. Lower feedstuff costs and probably better quality feedstuffs reduced costs of feeding cattle.

Cattle have performed quite well in Kansas. For example, steers sold during February posted a 10% year-over-year improvement in average daily gain (up 0.35 pounds per day). Those steers also had better feed efficiency than cattle sold a year earlier – on a dry matter basis, pounds of feed per pound of gain dropped to 6.06 this February compared to 6.28 last year (an improvement of 4%).  

It has been a long time coming, but finally in recent months lower feedstuff costs and record high fed cattle prices have allowed cattle feeders to book a profit. LMIC calculates returns to cattle feeding in the Southern Plains. On a quarterly basis, from the Spring of 2011 throughout the Summer of 2013, estimated cattle feeding returns in the Southern Plains (commercial feedlot with all costs included) had been in the red. Over that timeframe, record losses were posted by the U.S. cattle feeding sector. Last Fall, monthly average closeouts began to show profits. In the first quarter of 2014, cattle feeders were very profitable, reaching the highest level since the Spring of 2010. 

Kansas feedlots have reported estimated feeding cost of gain since the first of this year well below 2013’s; in fact, they were the lowest since late 2010. But even with lower feeding cost of gain, profitability of cattle to be sold this Summer quarter is expected to drop from recent levels and could revert back into the red. Two factors will make profits difficult to achieve: 1) fed cattle prices normally drop into the Summer quarter, and should again this year; and 2) feedlots breakeven sale prices incorporate record high feeder cattle prices. Record high feeder cattle prices translate into very high breakeven sale prices required to turn a profit.  In recent weeks, many yearling steers placed into feedlots had breakeven sale prices of approaching $145.00 per head.