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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.

Cash cattle and wholesale beef prices moved higher last week, increasing profit margins for both cattle feeders and beef packers. Pork producers saw modest per head losses.

Rising wholesale beef prices and declining packing plant utilization are two indicators to watch as the 2023 cattle markets unfold.

Cattle feeders experience largest average profits in seven years as packer margins dip into the red.

Profit margins for cattle feeders and packers continue pacing in opposite directions as shrinking supplies of market-ready cattle drive negotiated cash prices higher.

Momentum continues to build for cattle feeders as closeouts saw average profits increasing during the final week of 2021. Farrow-to-finish hog operations continue with negative profit margins.

Modest increases in cash prices for cattle and hogs helped boost average feeding profit margins the final week of February, while margins for beef and pork packers declined.

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.

Cattle prices moved higher last week but cattle feeding margins remain modest. The supply-demand fundamentals are trending in favor of cattle feeders.