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Profit balance shifting in beef sector

A USDA livestock economist suggests the profit balance is shifting in the beef sector.

Shayle Shagam says cow/calf operators, feedlots, and packers have been mostly in the black so far this year.

But with expectations of more cattle coming out of feedlots and associated price declines, the margin environment is changing.

“Packer margins are actually counter-seasonally relatively strong.  Normally this would be a period of time when the demand for wholesale choice cuts of beef tends to not be as strong just ahead of the period when retailers begin to buy for grilling season.”

He says feedlot margins remain healthy.

“But obviously as they begin to have to market some of these fed cattle at lower prices in the middle part of the year, their returns are likely going to be squeezed.”

Shagam says cow/calf margins are thinning and he expects, on average, losses later in the year.

 

*Audio courtesy of USDA*