Profit Tracker: Margins Improve 20%

December 29, 2015 11:32 AM

A $6-plus per cwt. gain in cash cattle prices produced a 20% improvement in feeding margins. It was a $150 per head improvement, but still feedyards lost $546 on every animal shipped last week, according to Sterling Marketing, Inc., Vale, Ore.

USDA’s reported 5-area cash price last week was $123.48 per cwt., $6.67 per cwt. higher than the week before, yet $42 per cwt. short of breakeven.

Feeder cattle prices factored into Sterling Marketing’s sample closeout held firm last week at $147 per cwt., but that price is $26 per cwt. lower than a month ago, and $75 per cwt. lower than a year ago. Yearling steers factored into last week’s placements at $563 per head less.

Beef packer margins declined nearly $41 per head, resulting in average profits of $26 on every animal processed. Packer margins are about $6 per head better than last month.

A month ago cattle feeders were losing $562 per head, while a year ago losses were pegged at $23 per head, according to Sterling Marketing. Feeder cattle represent 79% of the cost of finishing a steer.

A month ago beef packers were earning $20 for every animal processed, while a year ago packers were losing $60, Sterling Marketing estimates.

Farrow-to-finish pork producers lost $28 per hog last week, about $3 per head more than the previous week, but $2 per head better than the $30 per head loss found a month ago.

Pork packers saw their margins decline $6 to a profit of $34 per head. Negotiated prices for lean hogs were $51.06 per cwt. last week, a decline of $0.50 per cwt. from the previous week. Cash prices for fed cattle are $38 per cwt. lower 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 $412 per cow this year. Last year’s estimated average cow-calf margins were $526 per cow. Cow-calf profits for 2016 are projected at $212 per cow.

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