Profit Tracker: Feeding Margins Slip

July 28, 2015 05:00 PM

Cattle feeding margins took another tumble last week as cash fed cattle prices declined $2.40 per cwt. Feedyard closeouts show average losses of $156 per head last week, or roughly $50 per head worse than the week before. Packers saw their margins improve $13 per head, leaving them with a loss of $1.61 on every animal processed, according to the Sterling Beef Profit Tracker.

Choice steer prices closed at $145.50 per cwt., a $3 per cwt. decline from the previous week. Closeouts were also negatively impacted by a $3 per cwt. increase in the price of feeder cattle calculated against last week’s marketings. Packer margins were held in the red by another $2 per cwt. decline in the beef cutout price.  

Feedyard margins are roughly at the same point as a month ago, yet they are more than $500 below last year’s average profit of $357 per head. Feeder cattle represent 78 % of the cost of finishing a steer, still significantly higher than last year’s 73%.

A month ago beef packers were earning $155 on every animal processed, while a year ago packers were earning $73, Sterling Marketing estimates.

Farrow-to-finish pork producers showed a profit margin of $22 per hog last week, steady with the previous week and a month ago.

Pork packers saw their margins improve $7 per head from a $4 loss to a $3 per head profit. Negotiated prices for lean hogs were $77.39 per cwt. last week, down $1.45 from the previous week.

Cash prices for fed cattle are $18 per cwt. lower than last year, and negotiated hog prices are $55 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $658 per cow this year. Last year’s estimated average cow-calf margins were $548 per cow.

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