Profit Tracker: Feeding Margins Slip Into The Red

Feeding margins declined last week
Feeding margins declined last week

Cash fed cattle prices lost another $2 per cwt. last week, a decline of $7 over two weeks. The decline, coupled with higher input costs on feeder cattle when they were placed on feed, left feedyards with an average $22 loss on cattle marketed last week, according to the Sterling Beef Profit Tracker.

Cattle traded last week had an average breakeven of $114.05 per cwt., about $4 per cwt. higher than the previous week, but nearly $5 lower than the same week a year ago. Average cash prices at $112.44 last week were $15.59 per cwt. lower than the same week a year ago.

Packer margins jumped $58 per head higher to $142. The packer/feeder margin spread for the week ending March 7 was $164 per head in favor of packers. The packer/feeder margin spread reached a record high the week ending September 13, 2019, about a month after the Tyson fire. That week saw the packer/feeder margin spread reach $618 per head, in favor of packers, as cattle feeders lost $203 per head and beef packers saw profits of $415 per head.

A year ago cattle feeders found cash profits of $126 per head on closeouts the first week in March, while packers saw profits of $97. (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 71% of the cost of finishing a steer compared to 72% 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 improve $32 per head, yet losses remain at $15. Lean carcass prices traded at $52.73 per cwt., $1.14 per cwt. higher than the previous week. A year ago pork producers were losing $24 per head. Pork packers saw average profits of $20 per head, steady with the previous week.

Sterling Marketing president John Nalivka projects cow-calf profit margins of $142 per cow in 2020, or $24 per cow better than 2019. Estimated average cow-calf margins were $162 in 2018, $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka calculates an average profit of $107 for 2020, or $68 per head better than the estimated $39 per head in 2019. Average profits per head were estimated at $24 in 2018, and $181 in 2017. Nalivka said packer margins averaged about $216 per head in 2019, and he projects average profits of $163 per head for packers in 2020.

Related stories:

Fed Cattle Shed Another $2, Futures Lower

Nalivka: Let’s Talk Packer Capacity


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