November 2010 Articles

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Livestock Market News- Situation and Outlook, Week Ending Oct 29, 2010

Livestock Market News - Situation and Outlook, Week Ending October 29, 2010 Source: University of Arkansas
COW-CALF RETURNS POSITIVE IN 2010 Since the early 1970’s, the Livestock Marketing Information Center (LMIC) has estimated cash returns over cash costs plus pasture rent for a typical Southern Plains commercial cow-calf operation. The estimated returns are intended for market analysis uses, thus actual cow-calf returns will vary significantly. During the last few years, profitability for U.S. cow-calf operations has declined with negative returns posted in 2008 and 2009, due to higher costs of production and lower calf prices. In 2010, most cow-calf operations will return to profitability, however in response to recent market conditions LMIC lowered estimated cow-calf returns for 2010 and 2011 to reflect calf price forecasts.
As calculated by the LMIC, most cow-calf operations will be profitable in 2010, the result of higher calf and cull cow prices compared to 2009 and 2008. Although, production costs in 2010 were slightly less than last two years, net returns continue to be pressured in 2010 as input costs still remain rather high compared to historical norms. For the fourth quarter, calf prices are forecast to be notably higher this year than in 2009 and 2008, but still lower than 2007. Currently, LMIC estimated returns for 2010 at about $26.00 per beef cow compared to losses of $32.00 and $16.00 per beef cow posted in 2009 and 2008, respectively.
Historically, estimated cow-calf returns tend to vary considerably over time. In the 37 years the LMIC has estimated cow-calf returns (including 2010); 22 years had positive returns or 59 percent, with only two of those years with returns over $100 per cow. Looking ahead to 2011, estimated cow-calf operations will remain positive, but could moderate some compared to 2010’s depending on calf prices and input costs.