Feedyard margins are slowing erasing the red ink. Margins remain $165 in the red, but that looks good when compared with the $245 per head losses found a month ago. Last week’s $2.50 per cwt. rally in cash fed cattle prices helped feedyard closeouts improve nearly $60 per head, according to the Sterling Beef Profit Tracker. USDA’s 5-area direct cash price was $136.50 per cwt.
Closeouts also benefitted from a $4 per cwt. decline in the cost of the feeder cattle that factored into last week’s profitability. The price of feeders against last week’s closeouts was $193.61, or about $35 per head less than the week before, and $100 less than two weeks ago, according to calculations by John Nalivka, Sterling Marketing, Inc., Vale, Ore. The total cost of finishing cattle marketed last week was $1,947 per head.
Beef packer margins have declined significantly over the past month, falling $4 last week to a per head profit of $12. Packer margins, however, are about $34 per head lower than last month.
Sterling Marketing estimates feedyards lost a cumulative unhedged $4.7 billion in 2015, with average weekly losses of $239.26 per head. That compares to an unhedged profit of $3.9 billion in 2014, and losses of $1.1 billion in 2013.
A month ago cattle feeders were losing $245 per head, while a year ago feedyard closeouts were $150 in the red, according to Sterling Marketing. Feeder cattle represent 77% of the cost of finishing a steer, compared with 81% a year ago.
A month ago beef packers were earning $47 for every animal processed, while a year ago packers were losing $17 per head, Sterling Marketing estimates.
Farrow-to-finish pork producers found profits of $3.11 per hog last week, steady with the previous week, and $9 per head better than the $6 per head loss found a month ago.
Pork packers saw a $2.50 decline in profit margins to $7 per head. Negotiated prices for lean hogs were $65.87 per cwt. last week, up a modest 14 cents per cwt. from the previous week. Cash prices for fed cattle are $22 per cwt. lower than last year, and negotiated hog prices are $1.23 per cwt. higher than last year.
Sterling Marketing projects 2016 average cash profit margins for cow-calf producers at $237 per cow. Last year’s estimated average cow-calf margins were $429 per cow. Cow-calf profits for 2014 were estimated at $526 per cow.