Profit Tracker: Feeding Margins Put On Lipstick

May 12, 2015 03:27 PM
Profit Tracker: Feeding Margins Put On Lipstick

Cattle feeders added a little powder and lipstick to closeouts this week, but the ugly continues to shine through. Modest gains in the cash market produced a $35 per head improvement to feedyard margins, but losses remained near $173 per head.

The 5-area direct cash cattle price increased $1 per cwt. to $161.72, but that was well below the average breakeven price of $174.94, according to the Sterling Beef Profit Tracker. A year ago cattle feeders were earning $216 on every animal sold.

Beef cutout prices traded $0.43 lower than the previous week at $254.33, and packer margins declined $20 per head, resulting in average profits of $24 on every animal processed.

Farrow-to-finish pork margins improved more than $14 per head, producing profits of $21 per head compared to profits of just $7 per head last week. Negotiated lean hog carcass prices improved $6.19 per cwt. to $79.34. 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 only slightly compared to the previous week. Feeder cattle represent more than 80% of the total cost for finishing a steer, up significantly from last year when feeder cattle represented 74% of that total cost.

A month ago beef packers were losing $22 on every animal processed, while a year ago packers were losing $47, Sterling Marketing estimates. Pork packers saw their margins erode $2 per head, with losses of about $16 per head. Cash prices for fed cattle are $13 per cwt. higher than last year, and negotiated hog prices are $34 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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