Extension economist describes 'longest period of red ink'

By CAROL RYAN DUMAS

Capital Press

Negative margins in the cattle feeding business are showing up in Idaho's meat production, which was down 8 percent in August compared with year-ago levels.

Commercial red meat production at Idaho packing plants totaled 18.3 million pounds, down 9 percent from July, according to a report from USDA's National Agricultural Statistics Service. Accumulated red meat production for the January-August 2009 period totaled 152.4 million pounds, up 1 percent from the comparable period a year earlier.

Nationwide commercial red meat production was down only slightly from August 2008. Beef production and cattle slaughter were 4 percent below the previous year.

Wilson Gray, extension economist with the University of Idaho at Twin Falls, said lower production is the result of decreased cattle-on-feed numbers.

"It started mid-year last year with high feed costs," he said. "Since the last half of 2007, cattle feeders haven't made any money. It's the longest period of red ink in the history of cattle feeding -- almost two years."

Although feed prices have moderated, some fed-cattle prices have declined.

"They're just really not making it yet," Gray said.

Part of the problem is lost value in by-products. Cattlemen have lost $6 a hundredweight due to a worldwide recession, he said. Export customers of hides and internal organs stopped buying those products.

Prices for slaughter steers in the Southern Plains all year have been $80 to $85 per hundredweight. Cost of production is mid-$90s to $100, Gray said.

"And calf prices have been below a year ago all year," he said.

The price for a 700- to 800-pound steer is currently $95 cwt. That's probably barely above break-even, he said.

It might seem counterintuitive then that Idaho cattle on feed for slaughter on Sept. 1 increased 8 percent over a year ago. But Gray said it tracks with seasonal placements.

"They're placing now to try to hit the good market right after the holidays," he said. "People get tired of turkey and want to go back to beef. There are typically more placements in the fall."

Cattlemen are also placing cattle on feed in the fall to have them ready for grilling season.

Cattle and calves on feed for slaughter in Idaho from feedlots with a capacity of 1,000 or more head on Sept. 1 totaled 195,000 head. The cattle-on-feed inventory was unchanged from Aug. 1, but up 8 percent from Sept. 1, 2008.

Placements of cattle in feedlots in Idaho with a capacity of 1,000 or more head during August totaled 42,000 head, down 3,000 head from August 2008. Marketings of cattle from feedlots with 1,000 head or more during August totaled 40,000 head, down 4,000 head from the same month a year ago.

Nationwide, cattle and calves on feed for slaughter for feedlots with capacity of 1,000 or more head were 1 percent below Sept. 1, 2008. Placements in feedlots during August were 2 percent above 2008.

Staff writer Carol Ryan Dumas is based in Twin Falls. E-mail: crdumas@capitalpress.com.

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