Feeders, packers trudge through another dismal week

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Talk to any feedyard manager and he’ll tell you the current scenario can’t continue. Cattle feeders aren’t just losing a little money. They’re losing money by the bucketful, and have been for months.

Same with packers. Their margins have deteriorated rapidly the past few months, and last week they lost more than $100 per head. Something’s got to give.

Boxed beef prices were a little higher Wednesday, but not enough to erase those ugly packer margins. So they’re doing the only thing they can – reducing their kills. They trimmed slaughter last week to under 600,000 head for the first time this year, and it appears the number will be even lower this week.

Trading on fed cattle through Wednesday in the Southern Plains and Nebraska was called limited on light demand. In the Southern Plains and Nebraska a few live sales occurred at $123 per hundredweight, $2 lower than last week. Just a month ago the board was pricing Live Cattle at $133.

Like packers, cattle feeders have seen enough red ink, too. They can’t push the live market higher, and they can’t control the cost of corn, so they’re doing what they can – lowering their bids on feeder cattle. And, despite the reduced number of yearling cattle offered for sale, the demand is starting to falter. The Oklahoma City auction saw heavy feeder cattle prices down $5 per hundredweight this week.

Live cattle futures prices closed about $0.55 per hundredweight lower Wednesday, while feeder cattle futures were more than $2 per hundredweight lower on most contracts.

The only glimmer of hope was found in the boxed beef trade. Choice boxed beef was quoted at $183.50, up $0.23 per hundredweight, and Select traded at $179.50, up $0.02. The choice-Select spread was $4.

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MEXICO  |  February, 14, 2013 at 07:15 AM


Ron Brandt    
Mason, Ohio  |  February, 17, 2013 at 02:21 PM

I love it when cattle feeders lose money because of their own stupidity! They have only themselves to blame for paying anything over $100/cwt for their feeder replacements.

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