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Weekly Feeder Cattle Risk Management Analysis

February 2, 2011
By: Justin Gleghorn, Brock Thompson Trading, Amarillo, TX


Feeder Prices 1 28 11

Weekly USDA feeder cattle prices for Texas and Oklahoma were used to calculate projected breakevens on cattle bought last week (week ending Jan. 21, 2011).  Breakevens were calculated for each weight group within sex (steer and heifer).  Ration price, $/ton dmb, was estimated at $320.  Other variables including interest, yardage and % feed financed were estimated to be 6%, $0.05/d and 100%; respectively.  As it is known that actual input estimates will vary greatly by region and by yard within region, our goal was to illustrate pricing differentials between weight classes and sexes of cattle. 

Live cattle futures finished the last full week of January basically unchanged from the previous week, week ending Jan. 21, 2011.  However, corn was approximately 13 cents lower and the feeder cattle index weakened $1.80/cwt and as a result live cattle breakevens decreased slightly from the previous week.  With that said, the margin is still negative for cattle being placed.  Similar to previous weeks, heavier weight heifers appear to be the most appealing purchase given current market conditions.


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RELATED TOPICS: Beef, Marketing, Fed Cattle



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