One can only assume that these record-high ratios cannot last forever. Either higher fed-cattle prices need to be realized soon or feeder cattle prices have witnessed their highs for now. Click here to view Replacment Price Ratio chart Profit and loss Even though fed-cattle prices have been outstanding from historic perspectives in 2000, the same cannot be said for feedlot profitability. Which just goes to show that high prices don't automatically mean good profits. The feedlot industry had basically been in the black through 1999 and the first half of 2000.
Third quarters tend to be the ones that experience negative returns from a historical perspective.
Over the past 13 years, the third quarter of each year has witnessed the worst returns for that specific year 8 times. Seasonally, third quarters tend to see the lowest fed-cattle prices during the year which would account for the high probability of negative margins. Using the Statistics Canada consumption data and deflated retail price of beef in conjunction with a beef demand index model developed by a U.S. working group, Canfax calculated a demand index for Canadian beef. Other meat prices are also on the rise.