Feeding profits, packer margins continue decline

Cattle feeding profits dropped another $30 per head last week as cash fed cattle prices declined $2 per hundredweight. Profitability remains well above $100 per head for cattle marketed last week, but the seasonal trend continues lower. Packer margins also declined about $10 per head, keeping processing margins in the red for the fourth consecutive week. The Sterling Profit Quotient fell 94 points for the week, according to estimates developed by Sterling Marketing Inc., Vale, Ore.

“Estimates for feedlot feed costs, breakeven prices, and margins are generated based on the cost of a 775- pound feeder steer, and corn prices (Western Kansas) during the week the cattle were placed on feed,” says John Nalivka, Sterling Marketing president.

“The days on feed for those animals and closeout week are then calculated using average data that might be expected for feeding performance, i.e. feed conversion and ADG. Breakevens and margins will vary according to differences in the cost of cattle, cost of feed, and feeding performance,” Nalivka says.

The Sterling Beef Profit Tracker is calculated using actual weekly prices for Choice fed steers, feeder steers, feed costs, boxed beef-cutout prices, hide and offal values, and other factors that influence profit margins.

The Sterling Beef Profit Tracker for the week ending May 7:

• Average feedyard margins: $125.23 per head.
• Average packer margins: -$25.19 per head.
• Sterling Profit Quotient: 371.2.

The Sterling Beef Profit Tracker is produced by Sterling Marketing Inc. and John Nalivka, president, Vale, Ore., and is published weekly by Drovers/CattleNetwork.