Weekly USDA feeder cattle prices for TX and OK were used to calculate projected breakevens on cattle bought last week, week ending April 8, 2011. Breakevens were calculated for each weight group within sex (steer and heifer). Ration price, $/ton dmb, was estimated at $340. 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.
Although live cattle trade was steady to higher last week, the futures market ended the week lower and closed lower each day for the week ending 4-8-11.
In the country, feeder cattle prices were mostly higher from the previous week; approximately $3.00/cwt. Drought conditions are dampening demand for stocker weight cattle as availability of summer grazing is looking bleak for many grazing regions.
Grain prices continue their rally. Some early groundwork began in the Midwest last week and as we move forward it is likely that the grain markets will trade weather news. In addition, it is being noted in the futures market that investment money may be taking profit in many commodities as they have met their upside goal. This could potentially pressure live and feeder cattle futures prices as they have experienced a tremendous rally over the last 15 months.
With that being said, much of the fundamental information is bullish for the cattle; but the influence of investment money has to be kept in mind.