Profit Tracker: Margins Improve 38%
Cattle feeding margins improved by 50% over the past two weeks, and by 38% during the past week. Unfortunately, cattle feeders still lost $345 per head last week, which would produce total industry losses of roughly $150 million for the week, assuming no risk management was utilized.
Closeouts improved significantly due to the $10.80 per cwt. rally in fed cattle prices, according to calculations by Sterling Marketing, Vale, Ore. USDA’s reported 5-area cash price last week was $134.28, still $26.16 per cwt. short of breakeven.
Feeder cattle prices factored into Sterling Marketing’s sample closeout were $6 per cwt. lower than the previous week at $213.15 per cwt., and $12 per cwt. lower than feeder cattle prices factored into closeouts a month ago. Yearling feeder cattle placed on feed last week averaged $147 per cwt., which represents a $588 per head decline from the same steers placed on feed a year ago.
Beef packer margins declined $14 per head, resulting in average profits of $31 on every animal processed. Packer margins are about $4 per head better than last month.
A month ago cattle feeders were losing $611 per head, while a year ago feedyard closeouts were $8 in the black, according to Sterling Marketing. Feeder cattle represent 79% of the cost of finishing a steer.
A month ago beef packers were earning $26 for every animal processed, while a year ago packers were losing $45, Sterling Marketing estimates.
Farrow-to-finish pork producers lost $28 per hog last week, nearly steady with the previous week, but $2 per head more than the $26 per head loss found a month ago.
Pork packers saw their margins decline $1.60 per head to a profit of $26. Negotiated prices for lean hogs were $50.88 per cwt. last week, a decline of $0.12 per cwt. from the previous week. Cash prices for fed cattle are $31 per cwt. lower than last year, and negotiated hog prices are $26 per cwt. lower than last year.
Sterling Marketing president John Nalivka projects 2016 average cash profit margins for cow-calf producers at $212 per cow. Last year’s estimated average cow-calf margins were $412 per cow. Cow-calf profits for 2014 were estimated at $526 per cow.
