Jun 08, 2015

Brazilian Ranchers to place more Cattle in Feedlots in 2015

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The number of cattle placed in feedlots in Mato Grosso in 2015 is expected to increase 24% according to the Mato Grosso Institute of Agricultural Economics (Imea) and the Mato Grosso Ranchers Association (Acrimat). If verified, there will be 789,000 cattle placed in feedlots in the state in 2015 compared to 636,000 in 2014.

The capacity of the feedlots in the state increased 6% in 2015 to 895,500 compared to 846,400 in 2014. The increase in capacity reflects optimism on the part of feedlot operators in spite of rising costs for replacement cattle.

According to Imea, the price of fat cattle increased 19% year-on-year while at the same time the price of replacement cattle increased 27%. The cost of replacement cattle went from 68% of the total operational cost at the feedlots in 2014 to an estimated 74% of the total costs in 2015. The other production costs at the feedlots are expected to remain basically stable in 2015 compared to 2014.

The daily cost of keeping a cow in the feedlot, including replacement costs, is expected to increase 2.6% from R$ 2.45 per head per day in 2014 to R$ 5.59 per head per day in 2015. If cattle futures remain where they are currently, the profit per head in 2015 should not surpass R$ 80 per head or US$ 26 per head using an exchange rate of 3.1 Brazilian reals per U.S. dollar.

Mato Grosso is the largest corn producing state in Brazil, but a majority of the corn must be trucked at very high costs to livestock producers in southern Brazil or to export facilities in southeastern Brazil. Anything that will increase domestic consumption of corn in the state is viewed as a positive step forward by the corn producers in the state.