America’s cattle feeders earned an average of $323 on a cash basis for every steer and heifer they sent to market during the first eight months of 2017. That’s according to calculations by John Nalivka, president of Sterling Marketing, Vale, Ore.
“During the 40-week period from November 26, 2016, until the week ended August 19, the industry’s cumulative cash cattle feeding profits totaled $5.8 billion,” Nalivka says.
That long string of healthy profits, however, is about to end. Projections from Sterling Marketing suggest cattle feeders will lose an average of $88 per head the final four months of this year.
Feeding margins during the first five months of this year proved to be much better than analysts expected, as cash cattle prices advanced on strong demand and increasing export sales. According to the Sterling Beef Profit Tracker, monthly feeding margins peaked in May at an average of $504 per head, but both March and April recorded margins in excess of $400 per head.
Sterling’s Beef Profit Tracker is a weekly snapshot of the economics of cattle feeding strictly on a cash basis. The calculations use an average price for feeder cattle, grain, processing charges, yardage, death loss and interest. Hedging or other risk management tools are not factored into the weekly Profit Tracker.
During the same 40 week period when cattle feeding margins totaled $5.8 billion, Nalivka calculates that beef packer margins were a cumulative $2.3 billion.