Feedlot Outlook
Tim Hammerich
News Reporter
Recent data is suggesting better times ahead for the feedlot industry. Kansas State University Extension Livestock Market Economist, Dr. Glynn Tonsor regularly computes feedlot closeouts.
Tonsor… “Negative returns or break-even returns, small losses, are projected for cattle leaving here in August as well as September, but then starting in October all the way through currently April of 2023, the furthest out month that my projections look at, are all positive returns and real narrowly, the months of November through January. So, cattle will be leaving feed yards- the returns are north of 100 dollars- that is the positive projected return I am talking about.”
Tonsor said improved margins are developing.
Tonsor… “These projections show a lower cost of gain, so corn prices and the like coming back some and moreover output prices. So, the price you are going to get for your finished animal is projected to go up notably for animals leaving the yard. These are projections, we have a long way to go until November to see if they are realized, but the market is signaling currently that things are going to improve for the cash operators at least in the feedlot space.”
One key factor here is strong sustained consumer demand.
Tonsor… “Retail- again, think grocery store demand, is actually up for every category I look at except for plant-based patties. So, ribeye steak, ground beef, pork chops, bacon, chicken breasts, those categories we are always looking at, the month of July had stronger grocery store demand than June, but the story is basically the flip when you look at food service. If you put a bow around that, I think it is again, ongoing evidence that consumers are tightening their belts.”
He added that prices and inflation are also important factors.
