Search - Drovers

Market leverage has shifted dramatically toward ranchers and cattle feeders over the past two months. The combination of rising cattle prices and declining wholesale beef prices has eroded historic packer margins.

The leverage shift continues to swing toward ranchers and feedyards as cattle supplies tighten and prices move higher.

Negative margins continue growing for beef packers as tightening supplies of cattle support cash prices $17 per cwt. higher than the same week a year ago.

Beef packers saw per head losses nearly double last week as wholesale beef prices tumbled $7 per cwt. lower. Pork processors are also found negative margins and producer margins remain short of breakeven.

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.

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.

If a seasonal price decline develops as anticipated, this year’s starting point for cattle feeders is the best in a decade. Pork producers notch their second week of modest profits.

Cattle feeding margins improved with a $2 per cwt. increase in cash cattle prices while farrow-to-finish hog margins declined modestly on slightly lower lean carcass prices.

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.