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Profit Tracker: Feedyard Margins Rising

11:05AM Jun 10, 2014

As America’s cattle market continues to defy historical trends, cattle feeding margins have benefited with solid profits most of the year. So far, June has produced weekly increases to per head feedyard profit margins, a rare occurrence in historical feedyard closeout data.

Last week saw cattle feeding margins increase $8 per head to an average of $172. The modest increase in profitability was due to $1 higher cash fed cattle prices and a slight decline in the average cost of gain, according to the Sterling Beef Profit Tracker.

Profit margins for pork producers recorded slight gains last week at $74.74 per head. Negotiated cash hog prices were reported at $1.50 per cwt. higher for the week while feed costs declined slightly. Pork packers recorded average profits of $9.56 per hog last week, up from the $3 profits they earned the week before. Both beef and pork margins are calculated by John Nalivka, president, Sterling Marketing, Vale, Ore.

Cattle feeders’ profits last week were $306 per head more than at the same time last year when $133 per head losses were recorded. Beef cutout values declined $1.44 per cwt. last week, and packer margins declined $14 per head, leaving packers with per head profits of $47. A month ago packers recorded losses of $47 on every animal processed, while profits totaled $61 per head at the same time last year.

Farrow-to-finish hog margins are about $6 per cwt. below where they were a month ago, though significantly better than last year’s $7.35 per head profits. The spike in both cattle feeding and farrow-to-finish profits this spring is due to significantly higher cash prices and lower overall feed prices. Cash prices for fed cattle are nearly $24 per cwt. higher than last year, and negotiated hog prices are more than $14 per cwt. higher than last year.