Feeding margins last week showed some improvement with a slight gain in the 5-Area Direct Negotiated Steer Price against a modest drop in the breakeven from the prior week. Last week’s decline in the breakeven was the result of a $3.45/cwt. decline in feeder prices the week those cattle were placed on feed.
Sterling’s estimate of the feedlot margin was -$287.66/head last week which was a notable difference from the same week a year ago at $490/head. Packers saw a minor drop in margins with a $4.16/cwt. drop in the Comprehensive Cutout with Sterling’s estimate for the week’s average at $156.36/head.
Again, it’s about the economics of capacity and capacity utilization in a volatile supply-demand situation right now. Excess packer capacity was resolved and next will be feedlot capacity in the face of tight feeder cattle supplies.
View the full Sterling Beef Profit Tracker for the week ending Oct. 10.
The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.
(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. Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices. The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs. Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)
