July 20, 2004

US Cattle Profits Rebounding

US Kansas State University economists learned that profitability is back for ready-for-market cattle this month. And the situation is likely to last at least another month or two.

Rodney Jones, K-State agricultural economist, had predicted an extended period of financial losses last winter as prices slid in the wake of the discovery of mad cow disease on December 23. Those losses did occur initially, though to a lesser degree than what forecasters had predicted.

Losses in March were averaging about $50 a head. The figure had fallen to $20 a head by April. In May, profits returned, with the average profit per head coming in at $29. In June, the picture grew even brighter with a profit of about $124 per head to owners of cattle on feed, Jones said.

Jones said June cash prices averaged $89 per hundredweight, while June's break-even price was $79 per hundredweight.

Significant positive returns are likely for July and August before higher break-even prices begin escalating in the fall as higher-priced feeder cattle begin to reach the finish stage, he added.