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

Average feed costs for finishing cattle and hogs are 25% to 28% higher than the same week last year, according to Sterling Marketing’s weekly calculations.

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.

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.

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.

Autumn’s fed cattle price rally has pushed average cattle feeding margins through the $200 per head barrier for the first time since well before the pandemic.

The highest cash fed cattle prices in seven years provided good profits for cattle sold last week but rising costs are pushing breakevens higher.

Profit margins for both cattle and hog finishing operations saw modest gains last week but also carry significantly higher feed costs than a year ago.