Profit Tracker: Running red

Most analysts expected feedyards to be near breakeven by the time the calendar turned to May. May is here and the underperforming cash fed cattle market has kept feedyards struggling.

Last week's closeouts produced about $75 of red ink after a $2.50 per cwt decline in cash cattle prices, according to the Sterling Beef Profit Tracker. Cash cattle prices retreated about $10 per cwt over the previous two weeks.

USDA's 5-area cash cattle prices closed at $123.76, compared to $126.29 the week before. Average break evens were $129.15, about equal to the previous week.

Feeder cattle prices averaged $173.54 per cwt. against the fed cattle sold last week, according to John Nalivka, Sterling Marketing, Vale, Ore. The total cost of finishing cattle marketed last week was $1,796.71 per head, $4 per head lower than the previous week.

Beef packer margins improved $18 per head, earning profits of $130 per animal. Packer margins are about $70 per head higher than a month ago.

Sterling Marketing estimates feedyards lost a cumulative unhedged $4.7 billion in 2015, with average weekly losses of $239.26 per head. That compares to an unhedged profit of $3.9 billion in 2014, and losses of $1.1 billion in 2013.

A month ago cattle feeders were losing $93 per head, while a year ago feedyard closeouts were $100 in the red, according to Sterling Marketing. Feeder cattle represent 75% of the cost of finishing a steer, compared with 79% a year ago.

A month ago beef packers were earning $60 for every animal processed, while a year ago packers were earning $44 per head, Sterling Marketing estimates.

Farrow-to-finish pork producers found profits of $18 per hog last week, up about $8 per head from the previous week.

Pork packer margins were $4 per head lower for a $12 profit per hog. Negotiated prices for lean hogs were $70.84, about $3.45 per cwt. higher than the previous week. Cash prices for fed cattle are $37 per cwt. lower than last year, and negotiated hog prices are $2 per cwt. lower than last year.

Sterling Marketing projects 2016 average cash profit margins for cow-calf producers at $233 per cow. Last year's estimated average cow-calf margins were $432 per cow. Cow-calf profits for 2014 were estimated at $517 per cow.