Editor’s note: The following was written by Bradley Zwilling with Illinois FBFM Association and University of Illinois, for the farmdoc daily website May 19.
Total economic returns in 2022 for Illinois beef feeding enterprises exceeded total costs by $25.41 per 100 pounds of beef produced in preliminary findings for farms enrolled in Illinois Farm Business Farm Management.
The 2022 returns were higher than the 2021 total returns above feed costs of 19 cents per 100 pounds produced. Total returns have exceeded total economic costs in four out of the last 10 years.
The 2022 level of return above all costs was $26.66 per 100 pounds beef produced above the average return above all costs for the 2013 through 2022 period.
Higher prices received contributed to the higher total returns for these enterprises. Total returns per 100 pounds produced increased from $107.65 in 2021 to $141.77 in 2022. Total returns for 2022 were the highest on record.
The average price received per 100 pounds of beef sold of $143.84 was 19% higher than 2021. This price was the third highest price received since this study began, with 2014 and 2015 being the highest with $147.19 and $149.47, respectively.
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The average price paid for feeder cattle replacements in 2022 of $163.17 was 17% higher than 2021. This was the highest price paid for feeder cattle replacements since 2015. The years 2014 and 2015 were the only ones when the price paid for feeder cattle averaged over $200 per hundredweight. The purchase cost of feeder cattle is subtracted from finished cattle sales in determining total returns.
Higher feed costs were not enough to offset the much higher gross returns as compared to 2021. Feed costs increased 11% in 2022 compared to 2021. Feed costs were $82.79 per 100 pounds produced in 2022 compared to $74.66 in 2021.
Non-feed costs increased from $33.18 per 100 pounds produced in 2021 to $33.54 in 2022. Maintenance and power expenses of $8.37 per 100 pounds produced make up the largest portion of the non-feed costs.
Feed and non-feed costs were $116.33 per 100 pounds produced in 2022. Total costs in 2022 were $8.49 per 100 pounds produced above 2021 and $20.70 above the last 10-year average of $95.63. Excluding the cost of feeder cattle, feed costs were 71% of the total cost to produce beef in 2022, compared to 67% for the four-year average.
Returns to cattle feeders increased in 2022 compared to 2021 and were above the last four-year average. The increase in price received was the main factor for the increased returns.
Projections for 2023 show that beef production is estimated to decrease about 5% and thus market cattle prices are expected to increase about 15%. Returns for 2023 will increase due to higher cattle prices. Feed costs will be lower with projected lower grain and forage prices.
With these factors combined, returns to all costs for 2023 are estimated to be higher than 2022.
