42 NEBRASKA CATTLEMAN April/May 2026 A family owned and operated Commercial Feedlot located in the heart of Nebraska’s Corn Production. OUR ATTENTION TO DETAIL MAXIMIZES YOUR PROFIT POTENTIAL! DFI also offers: Risk Management • Partnership Feeding Multiple Marketing Options Retained Ownership • Feeder Financing Private Consulting Nutritionist Private Consulting Veterinarian Location Close to All Major Packers Permanent Shades in Pens Two Locations: Columbus & Palmer • 13,500 head capacity Mike Drinnin, Owner/Manager • miked@drinninfeedlots.com Office: (402) 564-7409 • sharib@drinninfeedlots.com drinninfeedlots.com Jarad Drinnin - Columbus Cell: (402) 910-6508 Sam Drinnin - Palmer Cell: (402) 910-0233 losing $5 to $15 per hundredweight. This is nothing new. For most of 2025, breakevens started out below the futures market until cash rallied. Current breakevens for 2026 range from $240 to $260 (with some hitting more than $270). At current prices, packers are losing margin and cattle feeders are projected to lose margin. SLAUGHTER, WEIGHTS AND PACKER ACTION Slaughter capacity is an important factor here. Slaughter levels relative to maximum daily capacity show we are operating close to constraints in certain regions. With tight cattle supplies, we have been operating in an environment with too many hooks and not enough cattle. Tyson responded by closing Lexington and shutting down a shift in Amarillo. Historically, as margins deteriorate, packers can slow down chain speeds (i.e., lowering weekly kill rates). Lexington and Amarillo accounted for 7 percent of total capacity. However, the lower kill took capacity rates from upper 70s to lower 80s in terms of total capacity. With a general target of 90 percent, this helped packer margins but was not enough to materially impact prices. Right now, lower kill rates have not resulted in major downside pressure on live cattle prices. But the margin structure tells us packers are actively managing throughput, chain speed and procurement discipline to protect their side of the ledger. They are not passive participants. Lower cutout typically leads to lower slaughter rates and more cattle backing up in feedlots. Higher cutout could drive higher slaughter rates and more turnover. These margin dynamics – volatile packer margins and compressed feeding margins – can increase the chance of sudden market swings. THE HISTORICAL REALITY OF DRAWDOWNS Even in strong cattle cycles, we have experienced fast price corrections. These don’t always come from obvious causes: • Macroeconomic shocks • Disruption in capacity • Shifts in weights • Demand shifts • Leverage shifts With historically high prices, volatility risk increases! Historical drawdown analysis highlights the persistence of market volatility. Six-month drawdowns have routinely reached 10 to 25 percent, reflecting the sudden corrections that can occur even within bullish environments. The two-year drawdown profile expands that risk window, with losses historically extending 10 to 30 percent. Unlike equity markets, where capital CONTINUED ON PAGE 44 MARKETS CONTINUED FROM PAGE 40 1/4 Horizontal Nebraska Cattleman Natural & Complete Calf Program www.cuprem.com 1-800-228-4253 Calf 7 Capsules • Designed to boost immune systems & prevent scours for more pounds at weaning. • Give 1 capsule per calf as soon as possible. Probiotic 512T Paste • Contains live microbials and dried egg proteins. • Works to prevent scours, encourage appetite and naturally strengthen the immune response. • Give 5 grams per calf. CL Cow Replacer • Easy-mixing colostrum for newborn calves. • Mix with 1 qt. water; adjust volume as needed. • Best seller going on 67 years! SurelifeW/S • All-natural, drug-free scourrelief aid, designed for calves at birth up to 500 lbs. • Replenishes electrolytes. • Mix 80 grams with 1 qt. water. Cryp-to-Cal • Targets most pathogens that cause scours, including crypto. • Most effective when used at first sign of looseness. Costro Lac Powder • Newborn calf probiotic, vitamin and bioactive protein supplement. • Add 1 scoop to milk for 3-7 feedings for increased immunity. • 150 scoops per 2-lb. jar. Natural Animal Health Product Since 1958
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