The combination of shrinking packer profits and smaller feedyard losses over the past six weeks has reduced the packer/feeder margin spread by 27%, according to the Sterling Beef Profit Tracker.
USDA June 30 Report, Corn Acreage
Sharply lower cash cattle prices erased $100 per head from closeout profit margins last week and left cattle feeders re-evaluating ideas of a spring rally.
Cattle feeding margins jumped $72 per head higher the week ending Jan. 25 as the value of feeder cattle calculated against those closeouts declined $8 per cwt.
Beef packer continued with a stranglehold on cattle markets last week, buying a few cattle to fill their needs at lower money and keeping operating margins historically high.
Cattle feeders and beef packers are both experiencing modest mid-winter profits, though both margins were slightly lower on cash prices of $121.
Losses continued to grow for feedyards and the spread between feeder losses and packer profits only widened with a $1.50 per cwt. decline in cash cattle prices last week.
Feedyards saw closeouts improve dramatically last week after the cash cattle market posted its third consecutive week of higher prices.