Feedlot operation with negative profitability on last twelve months

“There was not a single moment with positive profitability in the latest twelve months”, says a statement from Feedlot Argentina Association launched last week. The cattle feeders explain that the combination of high calves prices with relatively lower prices of the steers, and the increase in grains prices eroded the profit of the operation.

As 90% of the Argentine beef production is consumed by the local market, the depreciation of peso (AR$) respect the dollar increases the cost of feeding. From January 1st to May 3rd, corn price was up 37% and soybean another 49%. Instead, the steer marketed at Mercado de Hacienda de Liniers (the reference market for cattle) was up only 20 percent.

Another issue was the severe drought during the summer in the Pampas, that cut the forage production doing that more cattle were sold to slaughter plants, pressing the price goes down.

According to the Feedlot Association, it’s expected that largest beef exports and the current depreciation (carrying the dollar above AR$21) increases steer prices and get better its commercial equation. Nevertheless, a high tax pressure at national, regional and local levels continue eroding the competitiveness of feedlot operation.