Cattle feeding margins declined further last week, slipping another $10 into the red. Packer margins also fell, but their profits remain strong, according to the Sterling Beef Profit Tracker. Cattle feeding profits have declined nearly $200 per head the past month. Packer margins, in the red most of the spring, are $100 per head higher the past month, climbing out of a $25 per head loss. The Sterling Profit Quotient declined 36 points for the week, according to estimates developed by Sterling Marketing Inc., Vale, Ore.
Live cattle prices were firm to $1 higher last week at $105 in the South and $107 to $108 in the North. Analysts believe the market has stabilized after a 15 percent decline from the spring highs. Good packer margins suggest increasing slaughter levels in the coming weeks, which will support prices. But market analysts say they still believe the summer price lows remain ahead.
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 June 11:
- Average feedyard margins: -$62.62 per head.
- Average packer margins: $74.16 per head.
- Sterling Profit Quotient: -169.7.
“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.