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Cattle Feeding Prospects Better in Early 2003

MANHATTAN, Kan. - With the new year came a somewhat brighter picture for cattle feeders, according to Kansas State University agricultural economist Rodney Jones.

"If current futures-based price forecasts hold, cattle feeders are positioned to realize profits of $40 to $70 per head on early 2003 closeouts," said Jones, who is a livestock production specialist with K-State Research and Extension.

Break-even prices for cattle headed to packing plants late in 2002 averaged in the high $60-per-hundredweight [cwt] area, and are likely to climb into the low $70s early in 2003, he said.

Current projections suggest that fed cattle prices will rebound into the mid- to upper $70s by early 2003, which should result in positive returns, the economist said.

On Jan. 6, February cattle futures on the Chicago Mercantile Exchange traded at 80.77 cents per pound [$88.77 per cwt]. April futures traded at 79.60 cents or $79.60 per cwt.

Cattle feeding returns have steadily improved over the past few months. The average closeout on slaughter steers in October and November yielded a loss of about $5 per head, Jones said. December closeouts, however, resulted in positive returns for some feedyards.

Jones said that cattle feeders had "been blessed" with mild weather the past several winters that aided rates of gain.

"Feeders should keep in mind that weather-related performance setbacks are very possible through the remainder of the winter. Unfavorable feeding conditions, or an unexpected increase in feed ingredient prices could impact cattle feeding returns relative to current expectations," he said.

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