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Packer margins remain in the red even as wholesale beef prices rallied $9 per cwt. and cash cattle prices were near steady.

Cattle feeders are finding modest profits on market-ready cattle early in the New Year, but replacement feeder cattle prices are driving projected breakevens to eight-year highs.

Spiking wholesale beef prices the week before Christmas helped lift packer margins into the black while increasing cattle feeding margins.

Average cattle feeding margins increased last week as negotiated cash prices set new record highs.

As cash cattle prices have been on an upward trajectory in 2023, packer margins have correspondingly moved lower. Sterling Marketing’s weekly estimates are printing packer margins red for the first time in six years.

The average cost of feeding a steer to finish weight was 25% higher for cattle marketed last week and is projected to be 31% higher for cattle placed on feed last week at roughly $600 per head.

Higher cash cattle prices and lower wholesale beef prices have erased much of the historic profits beef packers saw last year, according to estimates by Sterling Marketing, Inc.

Market leverage continues to shift in the favor of cattle and hog finishers, a trend that has continuously chipped away at the historic packer margins of a year ago.

Cattle and hog harvest rates were lower last week with higher cash prices paid to farmers and feeders. Margins for both beef and pork packers are trending lower.

The pendulum continues to swing in cattlemen’s favor as cash prices rally $3 per cwt. Pork producers see improved profit margins with a $7 per cwt. rally.