Dr. Pat Westhoff joins AgriTalk’s Chip Flory to share his spin on the latest trends in crop markets, livestock outlooks and projections for net farm income.
Cash fed cattle prices ended last week $10 per cwt. lower than last year while the beef cutout closed $16 higher than the same week a year ago. The result? Packer margins $314 per head more than last year.
Cattle and hog feeding margins were little changed last week, with both recording modest losses. Beef packers saw improved margins on significant gains in wholesale beef prices.
On a percentage basis, beef packer margins declined significantly last week. It's all relative, of course, since the starting point from the previous week was stunning.
Cattle and hog finishing margins were modestly positive the first week of December, marking the 11th consecutive week of profitability. Packer margins remain historically high.
Cattle and hog feeding operations saw their margins remain modestly profitable last week with little movement in cash prices. Both cattle and hog feeding margins are higher than last year at the same time.
Cattle and hog finishing margins are both modestly positive for the seventh consecutive week, though hog margins saw a slight decline with lower lean carcass prices.
Closeouts on cattle and hogs marketed last week remain modestly profitable for the sixth consecutive week, according to calculations by Sterling Marketing.
Cattle and hog finishing margins remain positive for the sixth consecutive week, but cash prices for both declined modesty last week and margins eroded.
Cattle feeders and pork producers continue to experience significant per head losses as market prices trend lower following slaughter and processing challenges from the COVID-19 pandemic.
Sharply higher beef cutout values produced windfall profits for beef packers last week while cattle feeders saw closeouts with average losses about steady, according to the Sterling Beef Profit Tracker.
Cash cattle prices lost another $2 per cwt. last week, a decline of $7 over two weeks. Coupled with higher input costs on feeder cattle, the decline feedyards with an average $22 per head loss last week.
Cattle feeding profit margins exceeded beef packer margins last week for the first time in more than two years as cash cattle prices have increased 20% since September.
Beef packers saw their margins decline to the lowest level since before the Tyson packing plant fire August 9 as beef cutout prices declined and cash cattle prices increased.
Last week’s $1 increase in cash fed cattle prices did little for feedyard profits, but the $6.40 rally in wholesale beef prices added another $25 onto already large packer margins.
The combination of shrinking packer profits and smaller feedyard losses over the past six weeks has reduced the packer/feeder margin spread by 27%, according to the Sterling Beef Profit Tracker.
Losses continued to grow for feedyards and the spread between feeder losses and packer profits only widened with a $1.50 per cwt. decline in cash cattle prices last week.
Beef packer continued with a stranglehold on cattle markets last week, buying a few cattle to fill their needs at lower money and keeping operating margins historically high.