Profit Tracker: Feeder Cattle Prices Come Home to Roost

08:24PM Nov 25, 2014
BT Feedlot Water Trough
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Despite another record-setting week for cash cattle trades, feedyard margins declined more than $100 per head. It’s not a misprint. Two weeks ago average feedyard margins were $231 per head. Last week, when cash cattle traded at $173 to $174 per cwt., average feedyard margins dropped to $132 per head, according to the Sterling Beef Profit Tracker.

How is that possible? “It’s the result of higher feeder cattle prices for cattle placed in June against this week’s marketings,” says Sterling President John Nalivka. “The price of feeder steers against last week’s fed cattle sales were $16 per cwt. higher than the week before. That’s about $120 to $130 per head, and accounts for the large decline in profit margins for last week’s fed cattle marketings.”

The sharp decline in cattle feeding profits still leaves margins about $87 per head higher than last year when profits were estimated at $45 per head, according to Nalivka. Farrow-to-finish pork margins improved $5 per head last week to nearly $40 per head. Both beef and pork profit margins are calculated by Sterling Marketing, Vale, Ore.

Beef packers saw their margins hold steady, though losses remain at nearly $84 per head, Sterling Marketing estimates. Those losses are $28 per head more than last year’s average losses of $57 per head. The beef cutout was up nearly $4 per cwt. at $251.57.

Pork packers saw their margins slip more than $43 per head, with profits now just over $4 per head.

Cash prices for fed cattle are $41 per cwt. higher than last year, and negotiated hog prices are $8 per cwt. higher than last year.

Nalivka projects average cash profit margins for cow-calf producers at $556 per cow this year. Last year’s estimated average cow-calf margins were $243 per cow.