In my last column, I stressed patience concerning unfavorable cattle feeding margins. Well, it looks like my patience is going to be tested for quite a while! Margins continue to run in the red with little end in sight. The industry is going through one of its worst stretches of profitability; maybe ever.
The price of feeder cattle is simply too high. Feed yards know their cost of grain, so why bid feeder cattle to levels where they are starting at $60 to $100 in the hole on day one? It’s like trying to undercut the competition just to get business while pricing yourself out of business. This is obviously not sustainable. We’ll just keep doing what we do well behind the scenes, ready to jump back into the race when the market bounces back.
*Quote by Thomas Carlyle