Feedyard margins increase, remain above $100

Cattle feeding margins increased nearly $5 per head last week, while packer margins decreased by more than $20 per head. Feedyard profits remain above $100 per head, which compares with a $13 per head profit at the same time last year. The Sterling Profit Quotient held steady for the week, according to estimates developed by Sterling Marketing Inc., Vale, Ore.

“Estimates for feedlot feed costs, breakeven prices, and margins are generated based on the cost of a 775- pound feeder steer, and corn prices (Western Kansas) during the week the cattle were placed on feed,” says John Nalivka, Sterling Marketing president.

“The days on feed for those animals and closeout week are then calculated using average data that might be expected for feeding performance, i.e. feed conversion and ADG. Breakevens and margins will vary according to differences in the cost of cattle, cost of feed, and feeding performance,” Nalivka says. “While I recognize the significant differences in performance during periods of extreme stress due to weather - such as those experienced last winter - Sterling Marketing does not attempt to adjust the model accordingly. Consequently, the estimated breakeven price may seem low, while the estimated margins may seem high.”

The Sterling Beef Profit Tracker is calculated using actual weekly prices for Choice fed steers, feeder steers, feed costs, boxed beef-cutout prices, hide and offal values, and other factors that influence profit margins.

The Sterling Beef Profit Tracker for the week ending July 17, 2010:

• Average feedyard margins: $106.89 per head.
• Average packer margins: -$28.15 per head.
• Sterling Profit Quotient: 307.6

The Sterling Beef Profit Tracker is produced by Sterling Marketing Inc. and John Nalivka, president, Vale, Ore., and is published weekly by Drovers/CattleNetwork.