Profit Tracker: Simply Worse

November 23, 2015 07:19 PM

The adjectives have all been used to describe the despair that is cattle feeding. Last week was simply worse than the week before, which was a train wreck. Sterling Marketing, Inc., Vale, Ore., calculates average losses on fed cattle were $542 per head last week, $24 per head more than the week before.

Last week’s 5-area cash price was $125.79 per cwt., down $2.78 and $41.70 per cwt. short of breakeven.

The ongoing market wreck has pulled feeder cattle prices significantly lower. Oklahoma City feeder steer prices factored into Sterling Marketing’s sample closeout against last week’s fed cattle was $225.83 per cwt. The same steers factored into last week’s placements at $173.94 per cwt., or $412 per head less.

Beef packer margins decreased $30 per head, resulting in average profits of $24 on every animal processed. Packer margins are about $10 per head better than last month.

A month ago cattle feeders were losing $343 per head, while a year ago profits were pegged at $132 per head, according to Sterling Marketing. Feeder cattle represent 80% of the cost of finishing a steer, somewhat higher than last year’s 77%.

A month ago beef packers were earning $14 for every animal processed, while a year ago packers were losing $84, Sterling Marketing estimates.

Farrow-to-finish pork producers lost $32 per hog last week, down from losses of $20 per head last week, and down from profits of $14 per head a month ago.

Pork packers saw their margins decline to a profit of $31 per head. Negotiated prices for lean hogs were $52.90 per cwt. last week, a decrease of $0.83 per cwt. from the previous week. Cash prices for fed cattle are $45.60 per cwt. lower than last year, and negotiated hog prices are $35.69 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $490 per cow this year. Last year’s estimated average cow-calf margins were $526 per cow. Cow-calf profits for 2016 are projected at $277 per cow.

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