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Profit Tracker: Losses Continue For Cattle Feeders

16:25PM Dec 23, 2014

Cattle feeding margins declined for the second consecutive week following a run of several months of exceptional profits. Average cattle feeding losses last week totaled $40 per head, about $8 more than the previous week, according to the Sterling Beef Profit Tracker.

Cash cattle prices fell $4 per cwt. last week, with the 5-area Direct price at $157.50, a major contributor to declining feedyard margins. The price of feeder cattle, however, is the primary reason feeding margins have tumbled. Feeder steer values against last week’s fed cattle sales averaged $213 per cwt., a $66 per cwt. increase over the same week a year ago. That means the feeder cattle cost about $500 per head more this year than last, and feeder cattle represent nearly 79% of the total cost for finishing a steer. A year ago feeder cattle represented 66% of that total cost.

Farrow-to-finish pork margins also declined last week, closing with a per head profit of $25. Both beef and pork profit margins are calculated by Sterling Marketing, Vale, Ore.

Beef packers saw their margins improve $2 per head, though losses remain at $60 per head, Sterling Marketing estimates. Those losses are $12 per head more than last year’s average losses of $48 per head. The beef cutout was down about $6 per cwt. at $240.

Pork packers saw their margins improve about $3 per head, with profits now over $10 per head.

Cash prices for fed cattle are $27.50 per cwt. higher than last year, and negotiated hog prices are $2 per cwt. higher than last year.

Nalivka projects average cash profit margins for cow-calf producers at $556 per cow this year. Last year’s estimated average cow-calf margins were $243 per cow.