For the second consecutive week, cattle feeding margins and beef packing margins both declined substantially last week as boxed beef cutout prices dropped. In an unusual twist, cattle feeding margins declined despite cash fed cattle prices moving $4 to $5 per hundredweight higher at $117.32 per hundredweight. Choice boxed beef prices declined $3.37 for the week.
Feeding margins declined $27 per head, and packer margins declined nearly $50 per head, according to the Sterling Beef Profit Tracker. The Sterling Profit Quotient gained lost 95 points for the week, according to estimates developed by Sterling Marketing Inc., Vale, Ore.
Feedlots have lost money on most of the cattle marketed this summer despite relatively good prices. Those negative feeding margins are due largely to higher feeding costs. Last week’s closeouts reveal that feed accounts for more than 28 percent of total feeding costs, while closeouts at the same time last year show feed cost at just 15 percent of total feeding costs.
For comparison, last week’s closeouts saw average cash prices at $117.32 per hundredweight, while last year’s cash prices were at $97.66 per hundredweight. One year ago feedyards were reporting average profits of $97 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 September 10:
- Average feedyard margins: -$109.43 per head.
- Average packer margins: -$8.27 per head.
- Sterling Profit Quotient: -332.1.
“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.