Profit Tracker: Feeding Margins Steady, Packer Margins Erode
Despite a $1 to $2 per cwt. decline in cash cattle prices, cattle feeding margins were near steady at $59 per head the week ending Jan 21. A decline in wholesale beef values sliced $40 per head off packer margins, leaving a profit of $108 per head, according to the Sterling Beef Profit Tracker. Packer margins a year ago were estimated at $554 per head.
Market-ready steers sold the week ending Jan. 21 at $155.43 per cwt., down $1.84 from the previous week. A year ago cash sales were at $137.69 per cwt., producing an average profit of $102 per head.
Last week’s beef cutout price closed at $271.85 per cwt., down $6.27 from the previous week. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Oregon.
Costs associated with finishing cattle have increased dramatically since April. Cattle sold last week carried a total feed cost of $585 per head, which is 20% higher than the $469 feed costs for cattle sold the same week a year ago.
Cattle marketed last week had a breakeven of $151.17 per cwt., while cattle placed on feed last week have a breakeven of $151.63 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $176.59 per cwt., and feed costs of $585 per head. The feeder steer price is 10% higher than last year.
The estimated total cost for finishing a steer last week was $2,116 per head, up 14% from last year’s estimate of $1,826 per head.
Fed cattle slaughter totaled an estimated 489,668 head, about 11,000 head fewer than the previous week and 2,000 head fewer than the same week last year. Packing plant capacity utilization was estimated at 85.4% compared to 85.7% last year.
Farrow-to-finish hog producers saw losses of $32 per head last week, about $7 further into the red compared to the previous week. Pork producers saw losses of about $3 per head the same week a year ago. Lean carcass prices averaged $73.06 per cwt., down $2.54 per cwt. from the previous week and up $2.05 from last year.
Pork packers saw profits of about $6 per head, or $1 per head more than the previous week. Last year pork packers saw profits of $37 per head. Hog slaughter was estimated at 2.531 million head, down 153,000 head from the previous week and up 95,000 head from last year.
Pork packer capacity utilization was estimated at 94.7% compared to 90.5% last year.
(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.)