Profit Tracker: Rally Boosts Feeding Margins

July 6, 2015 03:36 PM
Profit Tracker: Rally Boosts Feeding Margins

A much needed price rally helped cattle feeders erase a lot of red ink last week. Although average cash margins remain negative, feedyard closeouts improved $137 per head last week, closing at an average loss of $11.71. The previous week feedlots lost $149 on every animal shipped, according to the Sterling Beef Profit Tracker.

Choice steers rallied nearly $3 per cwt. last week, closing at $151.14 per cwt. Still, beef packers saw their margins decline modestly to a profit or $140 per head.

Much of the improvement in feedyard margins the past two weeks is due to significantly lower costs attached to the feeder cattle calculated against last week’s closeout. Feeder cattle were priced into last week’s ledger at $12 per cwt. lower than the previous week, and about $22 per cwt. lower than a month ago. Feeder cattle represent 77.5 % of the cost of finishing a steer, significantly higher than last year’s 73.3%. A year ago feedyards were showing a profit of $319 per head.

A month ago beef packers were earning $13 on every animal processed, while a year ago packers were earning $48, Sterling Marketing estimates.

Farrow-to-finish pork producers showed a profit margin of $19 per hog last week, steady with the previous week, but $12 per hog lower than a month ago.

Pork packers saw their margins decline $3 to a negative $0.94 per head. Pork packer margins have hovered near the breakeven mark for several weeks. Cash prices for fed cattle are $6 per cwt. lower than last year, and negotiated hog prices are $53 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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