Profit Tracker: Feedyard Woes Continue

May 6, 2015 10:45 AM
Profit Tracker: Feedyard Woes Continue

Cattle feeding margins were unchanged from the previous week, which means the train wreck continues. Despite modest gains in the cash market, cattle feeders lost an average of $206 per head, just $1 better than the previous week.

The 5-area direct cash cattle price increased $1 per cwt. to $160.74, but that was well below the average breakeven price of $176.61, according to the Sterling Beef Profit Tracker. A year ago cattle feeders were earning $196 on every animal sold.

Beef cutout prices traded $2.71 lower than the previous week at $254.79, and packer margins declined $21 per head, resulting in average profits of $45 on every animal processed.

Farrow-to-finish pork margins improved more than $10 per head, producing profits of $2.59 per head where losses of $8.14 per head were found last week. 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 $41 on every animal processed, while a year ago packers were earning $17, Sterling Marketing estimates. Pork packers saw their margins erode $5.42 per head, with losses of about $9 per head. Cash prices for fed cattle are $12 per cwt. higher than last year, and negotiated hog prices are $42 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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