US cattle feedlots facing negative margins on high costs

U.S. cattle feedlots are expecting slight losses in 2013 in the wake of high livestock feed costs, according to Michael Swanson, an agricultural economist at Wells Fargo & Co.
The U.S. herd reached a 61-year low after the 2012 drought, the worst drought since the 1930s and one which sent corn prices to an all-time high. "Economically, we use price to ration or to increase supply," said Swanson. "Our supply is that much more constrained." Cattle prices rose to a record $1.35175 a pound on the Chicago Mercantile Exchange on January 11. In 2012, futures climbed 8.9 percent, the fourth straight increase.
Higher animal weights have tempered the decline in the size of the herd, supporting beef production, said Swanson. Average steer weights were 1,503 pounds on February 4 and February 5, up 1 percent from the same days in 2012, according to U.S. Department of Agriculture data. But meatpackers may not allow weights to go up, as heavier animals yield more fat that can't be sold, and high corn costs make raising beefier cattle less attractive, said Swanson.

India gets cattle feed processing plant in state of Gujarat

A cattle feed processing plant and an institute for dairy technology have been inaugurated at Mahesana's Dudhsagar dairy in the Indian state of Gujarat, according to reports.
The factory is the biggest in the country and will process 1 million kilograms of cattle feed per day. Chief Minister Narendra, who led the inauguration, said that the cattle-rearing sector has been neglected in India. "Milk productivity per animal in India is lower when compared to other parts of the world," he said. "This is the reason why the cattle breeders in India have not become prosperous." To help remedy this, the government has recently set up Kamdhenu University to create a pool of manpower for encouraging scientific cattle-rearing techniques in Gujarat.

US feedlots buy fewer cattle on lower availability

U.S. feedlots bought 1.521 million head of young cattle in April, down 15 percent from April 2011's 1.785 million head, due to lower availability and improved pasture conditions that allowed cattle to remain on grazing areas, according to the U.S. Department of Agriculture.
The feedlot herd totaled 11.11 million as of May 1, down 0.6 percent from 2011 numbers. Analysts had expected a 0.3 percent gain. The U.S. cattle herd had been the smallest since 1952 as of Jan. 1 as a drought in the South scorched pastures, causing ranchers to cull herds and sell animals to feedlots earlier than normal. Ranchers sold more cattle in February, November, September, June and July than in the same months in 2011.
“Feedlot placements are falling off like a stone due to poor feedlot profitability, but more importantly, because of a lack of available cattle to put on feed,” said Troy Vetterkind, the owner of Vetterkind Cattle Brokerage. “This is bringing our total on-feed population even with a year ago and is going to be pretty supply-friendly for the third and fourth quarter of this year.”

European feed production drops

European Union feed makers in 2009 produced 3.8% less feed than in 2008, according to a report from FEFAC, the European Compound Feed Manufacturers’ Federation. Following its recent meeting, the group said cattle feed was down by 6%, pig feed by 5% and poultry feed by 1%.
Current forecasts for the 2010 harvest indicate that production will decrease by 1% compared to 2009. FEFAC members expect to see relatively low quotations for crops this year due to record harvests in South America and a less favorable dollar-euro exchange rate.

US cattle feedyards face a weekly loss of $110 million

Cattle feedyards in the U.S. are suffering losses because the recession is forcing Americans to choose hamburgers over steaks, The Vancouver Sun reported. Economists predict that many feedyards will continue to close or downsize.
Jim Robb, an economist at the Livestock Marketing Information Center, was quoted as saying that recovery from the huge losses during the first three months of 2009 will take a very long time.
The president of AzTx Cattle Co., John Josserand, said that even promotional offers in restaurants and supermarkets across the country have not been able to sufficiently increase demand for the more expensive cuts of beef from grain-fed cattle.
Feedyards are incurring a $200 loss on every head of cattle sold. Industry-wide losses are estimated to be $110 million a week.
USDA data show that closures and the shrinking of feedyards has resulted in the lowest supply of cattle in U.S. in the last five years as of February 1.