Beef - General
Cattle feeding profit margins retreat further with a weaker cash market and limited packer interest.
Average cattle feeding losses totaled $106 per head for the week ending June 21.
Leverage shifting from feedyards to packers as summer begins.
Cattle feeding margins improved last week after a $1 boost to cash fed cattle prices.
A mid-July rally across all regions lifted feedyard margins out of the red for the week ending July 13, and cut into the extreme profit margins packers have enjoyed most of the year.
Last week’s $2 rally in cash cattle prices helped narrow the spread between feedyard losses and packer profits.
Cattle feeding margins slipped further into the red last week on soft cash prices, while packer margins climbed to extreme heights.
Feedyard closeouts improved modestly last week with a $1 increase in cash fed cattle prices. Packer margins increased on the extended rally to the beef cutout price.
Last week’s $1 increase in cash fed cattle prices did little for feedyard profits, but the $6.40 rally in wholesale beef prices added another $25 onto already large packer margins.
Both cattle and hog feeding enterprises continue showing modest losses while packers remain solidly profitable.
Average feedyard close-outs were printed in black ink last week for the first time in several months after a $3 per cwt. rally in cash cattle prices.
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.
Steady improvements in feedayrd margins the past month coupled with declining packer margins has narrowed the spread nearly 50% since late August.
The packer/feeder profit margins spread, historically large a month ago, has shrunk by 50% with gradually improving live cattle prices.
Improvements in feedlot margins were ever so slight last week due to a $1 gain in cash fed cattle prices. Pork producers saw a $5 per head improvement.
Beef packers saw their margins decline to the lowest level since before the Tyson packing plant fire August 9 as beef cutout prices declined and cash cattle prices increased.
After reaching historic levels earlier this fall, beef packer margins have experienced steady declines over the past month as cattle prices have increased.
Cattle and hog feeding margins declined significantly the week ending April 25, 2020, as harvest capacity at both beef and pork facilities was significantly reduced by the coronavirus pandemic.
Sharply higher beef cutout values produced windfall profits for beef packers last week while cattle feeders saw closeouts with average losses about steady, according to the Sterling Beef Profit Tracker.
Beef packer margins increased another $45 per head for the week ending March 27 while a rally in cash prices pulled feedyard closeouts into the black.
The six-week long rally in fed cattle prices pulled feeding margins to within $20 of breakeven last week, while pork producer margins saw only slight change.
After a one-week reprieve, cattle feeding margins are back in the red. Pork producers saw a $7 per head improvement, but remain below breakeven.
Both cattle and hog finishing margins improved modestly last week, with cattle slightly above and hogs slightly below breakeven.
A seven-week rally in negotiated cash fed cattle prices has finally lifted average cattle feeding margins to profitability. Pork producer margins remain underwater.
Cattle and hog finishing margins are both modestly positive for the seventh consecutive week, though hog margins saw a slight decline with lower lean carcass prices.
Cattle feeders saw modest profits for the 10th consecutive week, a headline-worthy observation in normal times. The beef complex is not operating in normal times.
Cattle and hog feeding operations saw their margins remain modestly profitable last week with little movement in cash prices. Both cattle and hog feeding margins are higher than last year at the same time.
Closeouts on cattle and hogs marketed last week remain modestly profitable for the sixth consecutive week, according to calculations by Sterling Marketing.
Beef packer leverage is evident with cash cattle prices $7 per cwt. lower than the same week a year ago and beef cutout prices $23 per cwt. higher. Pork producers are gaining leverage with a $5 per cwt. price rally.
Cattle and hog finishing margins were modestly positive the first week of December, marking the 11th consecutive week of profitability. Packer margins remain historically high.