Beef packer losses continued near the $50 per head level last week despite a decline in cash fed cattle prices. Packers responded by shortening kills at several plants across the country. Feedyards accepted bids $2 to $4 below the previous week, but the average negotiated cash price remained at $122.45, keeping feedyard profits near the $40 level, according to the Sterling Beef Profit Tracker. The Sterling Profit Quotient lost 27 points for the week, according to estimates developed by Sterling Marketing Inc., Vale, Ore.
Strong buyer demand continued for feeder cattle and calves with prices quoted steady to $4 higher. Lightweight calves found even better demand with prices $6 to $12 higher. Last week marked the eighth consecutive week nationwide feeder cattle prices have been predominantly higher. Boxed beef prices were also higher on the week. Choice beef cutout values were $4.90 higher with Select up $5.21.
Profits to cow-calf operations are called excellent this year on record and near-record prices for calves and yearlings.
Feed now accounts for more than 30 percent of total feeding costs, while closeouts at the same time last year show feed at just 19 percent of total feeding costs.
For comparison, last week’s closeouts saw average cash prices at $122.45 per hundredweight, while last year’s cash prices were at $98.40 per hundredweight. One year ago feedyards were reporting average profits of $71.91 per head.
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 November 19:
- Average feedyard margins: $39.14 per head.
- Average packer margins: -$49.01 per head.
- Sterling Profit Quotient: 103.8.
“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 produced by Sterling Marketing Inc. and John Nalivka, president, Vale, Ore., and is published weekly by Drovers/CattleNetwork.