Profit Tracker: Eroding Feedlot Margins

Cattle feeding margins continued to dip further into the red during the week ended April 10, as closeouts saw average losses of $143 per head, $63 more than the previous week. Packers, meanwhile, saw average margins of about $359 per head, or about $11 per head less than the previous week, according to the Sterling Beef Profit Tracker.

The cash cattle trade was $105 per cwt. the week ending April 10, about $6 per cwt. lower. The Choice beef cutout price was $13.26 lower at $223.64, completing a two-week period with a decline of $30 per cwt.

(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Here are the calculations.)

Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices.

The packer/feeder cash margin spread for the week ending April 10 was $502 per head in favor of packers, a $52 increase for the week.

A year ago cattle feeders found cash profits of $84 per head on closeouts the first week of April, while packers saw profits of $172. (Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Feeder cattle represent 70% of the cost of finishing a steer compared to 70% a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins decline $24, with $38 per head losses. Lean carcass prices traded at $42.05 per cwt., $10.15 per cwt. lower than the previous week. A year ago pork producers earned $38 per head. Pork packers saw average profits of $16 per head, down $2 per head from the previous week.

(Editor’s note: Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

Related stories:

Fed Cattle Trade ‘Soft’ As Cash Prices Decline Again


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