Profit Tracker: Train Wreck Continues

November 17, 2015 09:24 AM

After months of extreme losses, feedyard managers entered November with ideas the worst was behind them. November, however, has been reluctant to cooperate and cattle feeding losses have grown to disastrous levels. Two weeks ago feedyard losses flirted with $500 per head only to surpass that mark last week at a negative $518 per head, according to Sterling Marketing, Inc., Vale, Ore.

Last week’s 5-area cash price was $128.57 per cwt., down $2.65 and $39.85 per cwt. short of breakeven.

The train wreck that is America’s cattle feeding industry 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 $227.35 per cwt. The same steers factored into last week’s placements at $177.53 per cwt., or $399 per head less.

Beef packer margins increased $24 per head, resulting in average profits of $54 on every animal processed. Packer margins are about $3 per head better than last month.

A month ago cattle feeders were losing $385 per head, while a year ago profits were pegged at $231 per head, according to Sterling Marketing. Feeder cattle represent 80% of the cost of finishing a steer, somewhat higher than last year’s 76%.

A month ago beef packers were earning $51 for every animal processed, while a year ago packers were losing $84, Sterling Marketing estimates.

Farrow-to-finish pork producers lost $20 per hog last week, down from a profit of $1.50 per head the previous week, and down $40 per head from a month ago.

Pork packers saw their margins decline to a loss of $28 per head. Negotiated prices for lean hogs were $53.83 per cwt. last week, a decrease of $4.50 per cwt. from the previous week. Cash prices for fed cattle are $41.44 per cwt. lower than last year, and negotiated hog prices are $34.70 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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