Cattle Finishing Net Returns Hit by High Breakeven Prices
The cattle finishing business is known for its tight margins and reliance on feeder cattle prices relative to fed cattle prices and feed costs. According to Purdue University's College of Agriculture, high fed cattle prices or low feed costs do not necessarily translate into strong net returns.
Recent trends in feeding cost of gain, breakeven prices, and net returns were examined over the last ten years. Feeding cost of gain has been over $100 per cwt since June 2021, with a current range of $101 to $104. Corn and alfalfa projections suggest that feeding cost of gain will remain in this range for the rest of 2026.
The feeder to fed cattle price ratio was above one standard deviation of the long-run average from November 2025 to March 2026, resulting in cattle finishing losses. However, with a lower ratio in April and May, net returns turned positive. Looking ahead, the feeder to fed cattle price ratio is expected to remain above the long-run average for the rest of 2026 and into 2027.
Breakeven prices have been above $150 per cwt since October 2022, averaging $174 in 2023 and $192 in 2024. The breakeven price in the first quarter of 2026 was approximately $248, with projections suggesting that it will exceed $250 for the last six months of 2026 and the first six months of 2027.