Last week, the Federal Reserve Bank of Kansas City released a paper, “Initial Impacts of the 2012 Drought,” that “discusses some of the frequently asked questions surrounding the drought and its initial economic impacts on agricultural producers, agribusinesses and U.S. food prices. Although the drought is far from over and its final toll on U.S. agriculture is still uncertain, the 2012 drought will undoubtedly be etched into farmers’ memories for years to come.”
In particular, the paper stated that, “Despite lower feeder cattle prices, cattle feedlot enterprises face significant losses from high feed costs. Break-even prices for cattle feedlot operations surged in July as the price for feeds, such as soybean meal, corn gluten and dried distillers grains, jumped more than 25 percent since May.”
The Federal Reserve paper included this helpful graph depicting break even prices for parts of the livestock sector.