Profit Tracker: Dog Days for Feedlots

August 2, 2016 04:59 PM

The dog days of summer are here for cattle producers as red ink continues seeping into feedlot ledgers.

Cattle feeders recorded average losses of $24.43 per head last week, but nearly $10 less in red ink compared to the previous week, according to the Sterling Beef Profit Tracker. The margins represent a $75.90 per head decline over the $51.47 per head gains last month, according to estimates developed by John Nalivka, president of Sterling Marketing, Vale, Ore.

Beef cutout values dropped $2.22 per cwt. last week, while beef packer margins saw a more than $10 profit loss with margins now at $119.16 per head. A month ago packers were making $147.80 on every animal processed. Still, it is better than the earnings totaled last year of just $12.77 per head.

Farrow-to-finish hog margins fell $7.34 per head from last week to $17.36 per head. Overall for July margins were down 60% for farrow-to-finish producers after starting out at $43.40 per hog.

Negotiated cash hog prices saw a continued downward trend in July with prices falling more than $12 per cwt. and finishing the month at $70.12 per cwt. Pork packer margins had downturn with profits of $17.20 per carcass, compared to $23.45 last week. But that’s better than the $3.89 made at the start of the month, and the $6.34 per animal seen in 2015.

One bright spot for cattle producers was the slight rally seen in feeder prices. This past week’s placements were up $1.32 per cwt. at Oklahoma City for steer’s weighing 750-800 lb. That’s only a $0.05 per cwt. drop from a month ago.

Cow-calf producers have seen a dramatic change in profit margins compared to the past few years. Currently producers are averaging $175 in profit per cow, that’s nearly 60% less than the $432.87 made last year and more dismal than the $243.05 margin witnessed in 2013. 

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