Profit Tracker: Feeding Margins In The Black

Profit Tracker ( FJ )

The seven-week rally in negotiated cash fed cattle prices has finally pulled cattle feeding margins into the black. Last week’s average profit was just $40 per head, but represents a long climb out of what was a dark hole three months ago. Closeouts last week were calculated with a $106.82 average fed cattle price against an average breakeven of $103.92 per cwt., according to the Sterling Beef Profit Tracker. A month ago losses averaged nearly $142 per head.

Despite higher bids for fed cattle last week, packer margins increased $75 per head to $372. Packer margins benefitted from a Choice beef cutout price that jumped $12 per cwt. higher during the week to $220. Feedyard margins reported by the Sterling Profit Tracker are calculated on a cash basis only with no adjustment for risk management practices.

A year ago cattle feeders saw cash losses of $55 per head on closeouts the third week of August, while packers saw profits of $482. Last year’s Profit Tracker for the third week of August was the first to see the impact of the fire at Tyson’s Finney County, Kan., facility. (Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Feeder cattle represent 73% of the cost of finishing a steer compared to 71% a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins improve from $6 per head but continue to lose an average of $31. Lean carcass prices traded at $41.58 per cwt., up $2.24 per cwt. A year ago pork producers earned $21 per head profit. Pork packers saw average profits of $60 per head, steady with the previous week.

(Editor’s note: Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

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