Profit Tracker: Feeding Margins Improve $100 (VIDEO)

February 2, 2016 11:37 AM

Feedyard closeouts saw a $100 per head improvement last week, bringing losses under the $300 per head mark for the first time in months. The Sterling Beef Profit Tracker pegged losses at $245 per head, after a $3 per cwt. rally in the 5-area cash price to $137.35.

Improving margins are also benefiting from declines in feeder cattle prices factored into closeouts. Last week’s fed cattle marketings carried a $7 per cwt. lower price as feeder cattle than cattle sold the week before.

Still, the total cost of finishing the cattle harvested last week was roughly $2,040. Cattle placed on feed last week are projected to cost roughly $400 per head less to reach finish weight than last year, the bulk of that from lower feeder cattle prices, according to calculations by John Nalivka, president of Sterling Marketing, Vale, Ore.

Beef packers saw their margins decline more than $86 per head last week, leaving average profits at $47 per head. Packer margins are about $17 per head better than last month.

Feed Yards Show Improving Margins

AgDay, 2/4/16


Sterling Marketing estimates feedyards lost a cumulative unhedged $4.7 billion in 2015, with average weekly losses of $239.26 per head. That compares to an unhedged profit of $3.9 billion in 2014, and losses of $1.1 billion in 2013. 

Feeder cattle prices factored into Sterling Marketing’s sample closeout were $7 per cwt. lower than the previous week at $206.97 per cwt., and $12 per cwt. lower than feeder cattle prices factored into closeouts a year ago. Yearling feeder cattle placed on feed last week averaged $154.85 per cwt., which represents a $338 per head decline from the same steers placed on feed a year ago.

A month ago cattle feeders were losing $340 per head, while a year ago feedyard closeouts were $56 in the red, according to Sterling Marketing. Feeder cattle represent 79% of the cost of finishing a steer.

A month ago beef packers were earning $29 for every animal processed, while a year ago packers were losing $7 per head, Sterling Marketing estimates.

Farrow-to-finish pork producers lost $5.66 per hog last week, a $10 per head improvement from the previous week, and $21 per head better than the $27 per head loss found a month ago.

Pork packers saw steady profit margins of $20 per head. Negotiated prices for lean hogs were $61.23 per cwt. last week, a gain of $4.10 per cwt. from the previous week. Cash prices for fed cattle are $22 per cwt. lower than last year, and negotiated hog prices are $8 per cwt. lower than last year.

Sterling Marketing projects 2016 average cash profit margins for cow-calf producers at $237 per cow. Last year’s estimated average cow-calf margins were $429 per cow. Cow-calf profits for 2014 were estimated at $526 per cow.

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