Profit Tracker: Feeding Margins From Bad To Worse

June 9, 2015 08:54 PM
Profit Tracker: Feeding Margins From Bad To Worse

Cattle feeding margins dropped another $45 per head last week, totaling average losses of $163 for every animal that walked on the truck. That’s the result of a $4.37 per cwt. decline in the 5-area direct cash price which registered $154.93 per cwt., well below the average breakeven price of $167.53, according to the Sterling Beef Profit Tracker. A year ago cattle feeders were earning $173 per head.

Beef cutout prices traded nearly $9 per cwt. lower than the previous week at $247.81, after falling $4 per cwt. the week before. The huge drop in the beef cutout reduced packer margins nearly $53 per head, leaving packers with average profits of $13 on every animal processed.

Farrow-to-finish pork margins were nearly steady with profits of $31.86 per head. Negotiated lean hog carcass prices were 10 cents per cwt. lower at $81.84. Both beef and pork profit margins are calculated by Sterling Marketing, Vale, Ore.

The cost of feeder cattle factored against last week’s live cattle sales was up slightly compared to the previous week. Feeder cattle represent about 79% of the total cost for finishing a steer, up significantly from last year when feeder cattle represented 73% of that total cost.

A month ago beef packers were earning $26 on every animal processed, while a year ago packers were earning $47, Sterling Marketing estimates. Pork packers saw their margins improve $1 per head, leaving them with losses of slightly more than $1 per head. Cash prices for fed cattle are $9 per cwt. higher than last year, and negotiated hog prices are $29 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $541 per cow this year. Last year’s estimated average cow-calf margins were $548 per cow.

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