Profit Tracker: Feeding Margins Slip Further

June 2, 2015 12:25 PM
Profit Tracker: Feeding Margins Slip Further

A $6 per head decline in cattle feeding margins is tolerable, unless you were already losing $112. Feedyard closeouts finished last week $118 in the red as the 5-area direct cash price fell about 25-five cents per cwt. to $159.30. That’s well below the average breakeven price of $168.41 per cwt., according to the Sterling Beef Profit Tracker. A year ago cattle feeders were earning $165 per head.

Beef cutout prices traded nearly $4 per cwt. lower than the previous week at $256.73, and packer margins tumbled $20 per head, resulting in average profits of nearly $67 on every animal processed.

Farrow-to-finish pork margins improved about 25 cents per head, producing profits of $31 per head. Negotiated lean hog carcass prices also increased about 25 cents per cwt. to $81.94. 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 unchanged compared to the previous week. Feeder cattle represent more than 78% 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 $44 on every animal processed, while a year ago packers were earning $61, Sterling Marketing estimates. Pork packers saw their margins decline $2 per head, leaving them with losses of slightly more than $2 per head. Cash prices for fed cattle are $14 per cwt. higher than last year, and negotiated hog prices are $41 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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