Profit Tracker: Wholesale Beef Rally Boosts Margins
Spiking wholesale beef prices aided both packers and cattle feeders the week ending Dec. 24. Feedlot margins increased $52 per head to an average of $162 while packer margins averaged $44 per head after losing $49 per head the previous week, according to the Sterling Beef Profit Tracker.
The 5-area price for fed cattle closed slightly higher at $156.52 per cwt. The beef cutout price jumped $10.70 per cwt. for the week, closing at $262.45, which is $1.94 per cwt. higher than a year ago.
Costs associated with finishing cattle have increased dramatically since April. Cattle sold last week carried a total feed cost of $562 per head, which is 19% higher than the $455 feed costs for cattle sold the same week a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Oregon.
Cattle marketed last week had a breakeven of $144.91 per cwt., while cattle placed on feed last week have a breakeven of $152.65 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $177.15 per cwt., and feed costs of $581 per head. The feeder steer price is 10% higher than last year.
The estimated total cost for finishing a steer last week was $2,029 per head, up 13% from last year’s estimate of $1,760 per head.
Cattle slaughter totaled an estimated 562,000 head, about 60,000 head less than the previous week and 76,000 head more than the same week last year. Packing plant capacity utilization was estimated at 74.3% compared to 65.5% last year.
Farrow-to-finish hog producers saw losses of $8 per head last week, or about $2 per head more than the previous week. Pork producers lost an average of $29 per head the same week a year ago. Lean carcass prices averaged $82.13 per cwt., down $1.96 per cwt. from the previous week and up $19.02 from last year (13%).
Pork packers saw profits of about $2 per head, or $3 per head better than the previous week. Last year pork packers saw profits of $42 per head. Hog slaughter was estimated at 1.769 million head, down 811,000 head from the previous week and down 156,000 head from last year.
Pork packer capacity utilization was estimated at 65.8% compared to 71.5% 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.)