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.
Feedyards saw closeouts improve dramatically last week after the cash cattle market posted its third consecutive week of higher prices.
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.
Beef packers continued to maintain their leverage on cattle markets heading into the holiday-shortened first week of September.
The cash market for fed cattle last week gave some relief to feeders and overall market sentiment in the wake of the prior week’s $5/cwt. decline.
Cattle feeding margins slipped further into the red last week on soft cash prices, while packer margins climbed to extreme heights.