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Profit Tracker: Feedyard Margins Plunge Lower

18:02PM Feb 17, 2015

Cattle feeding margins declined $45 per head last week, leaving average per head losses at more than $77. Last week’s 5-area direct cash price for fed steers was $161.74, up more than $1 from the previous week, but still below the average breakeven price of $167.67, according to the Sterling Beef Profit Tracker. A year ago cattle feeders were earning $209 on every animal sold.

A $2.50 per cwt. decline in the boxed cutout price drove packer margins $45 per head lower, leaving losses at $99 on every animal processed.

Farrow-to-finish pork margins declined $14 per head, dropping closeouts to $1.23 in the red. 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 $8 per cwt. higher than the previous week, while the total costs for the animal and feed was $56 per head lower. Feeder cattle represent nearly 80% of the total cost for finishing a steer, up significantly from last year when feeder cattle represented 69% of that total cost.

A month ago beef packers were earning $12 on every animal processed, while a year ago packers were losing $83, Sterling Marketing estimates. Pork packers saw their margins improve $4 per head, with profits now at $15 per head.

Cash prices for fed cattle are $20 per cwt. higher than last year, and negotiated hog prices are $26 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $579 per cow this year. Last year’s estimated average cow-calf margins were $548 per cow.