Markets
Last week’s federally inspected cattle harvest was 5,000 head smaller than the prior week and 38,000 head smaller than the same week a year ago. A large contribution gap between classes of cattle in the harvested total remains in place.
The packer/feeder margin spread grew this week in favor of the feeder at $285 per head while pork producers found positive margins of $39.77.
Calf and feeder cattle prices have been much more active in the past three weeks with two market-moving events, including precipitation in the central states and the temporary closure of the southern border due to screwworms.
Packer margin losses grow, with beef packers at a loss of -$91.33 per head and pork packers averaging losses of -$5.87 per head.
Packer margins remain in the red for beef at -$60.29 and stayed similar for pork.
The latest Cattle on Feed report showed feedlot inventories on Nov. 1 were 11.99 million head, equal to one year ago. Heifer retention still affecting herd rebuilding.
Margins widened this week this week for pork and beef producers while packer margins remain in the red for beef at -$34.67 and decreased for pork to $8.65.
Last week’s harvest averaged 100,000 with except of Veteran’s Day holiday. Feeder cattle demand elevated after widespread precipitation throughout much of the winter wheat grazing region.
“The agricultural economy is inherently cyclical, and ag lenders are navigating the changing conditions across the sectors they serve,” said Jackson Takach, chief economist of Farmer Mac.
The estimated total cost for finishing a steer last week was $2,770 per head. Hogs placed for finishing last week had a breakeven at $68.36 per head.
Cattle harvest was down last week, but carcass weights remain record breaking. Q4 tends to be the period most prone to follow historical seasonal patterns for carcass cutout prices.
While feedlot margins are declining in the beef industry, hog margins are increasing for U.S. pork producers. Here’s a look at the latest Profit Tracker from Sterling Marketing.
Hogs placed for finishing last week had a breakeven at $69.49 per head. The estimated total cost for finishing a steer last week was $2,702 per head, according to the Sterling Profit Trackers.
Heifers made up 39.7 percent of the total feedlot inventory on Oct. 1, up slightly from the 39.6 percent in July.
Market update for week of Oct. 23 and a look at how carcass weigh and ribeye sizes correlates..
How did the beef and pork markets shake out last week?
Total beef production is down a scant 0.7 percent so far this year and may end the year equal to year ago levels. Despite this, wholesale and retail beef prices are higher thus far in 2024.
Beef packers saw profits increase $26 per head to a total loss of $86 per head. That puts the packer/feeder margin spread at $289 per head in favor of the feeder. Meanwhile, pork packers saw average profits of $25 per head, up $2.68 from the previous week.
U.S. Meat Export Federation announces new records for volume and value for pork exports will be achieved in 2024. While not as strong, beef exports are holding their own, led by Mexico purchases.
John Nalivka of Sterling Marketing shares his weekly Beef and Pork Profit Trackers, giving us a deeper look at what’s going on in the markets.
Negotiated cash cattle increased an average of $2.20 per cwt. the week ending Sept. 28. Farrow-to-finish hog producers found positive margins of $8.55 per head last week, down $1.75 from the previous week.
Harvested fed steer and heifer head counts outpaced the same weeks in 2023, with 501K and 492K in the past two weeks.
Beef packers saw profits drop $54 per head to a loss of $18 per head. Pork packers saw average profits of $20 per head, down $2 from the previous week.
Negotiated cash cattle increased an average of $1.18 per cwt. the week ending Sept. 14 and profit margins dropped by $13 per head to an industry average of $130.66 per head, according to Sterling Marketing. Farrow-to-finish hog producers found positive margins of $16 per head last week, down $2.91 from the previous week.
The key is demand and managing feedlot break-evens as cattle numbers continue to decline, says John Nalivka, president of Sterling Marketing Inc.
Beef packers saw significant margin improvement the week ending August 30, while pork packer margins, though down from the previous week, were sharply higher than a year ago.
Current supply metrics have boosted the value of Select carcasses as a reflection of less lean trim with lower cull cow volume. Fed cattle sector still finds highest return as carcass quality increases.
Last week’s substantial drop in the breakeven feeding cost for feeder cattle placed on feed last week is significant to the market outlook, says John Nalivka, president of Sterling Marketing Inc., in the latest Sterling Profit Tracker.
Negotiated cash cattle retreated an average of $2.31 per cwt. The week ending Aug. 17 and profit margins dropped by $79 per head to an industry average of $167 per head, according to the Sterling Beef Profit Tracker.
Beef exports continue to follow current market conditions of declining beef production and higher domestic beef prices.