Cattle feeding margins declined more than $50 per head last week despite cash prices $2 higher than the week before. Packer margins improved by nearly $30 per head, but red ink remains on most packer balance sheets, according to the Sterling Beef Profit Tracker. The Sterling Profit Quotient lost 165 points for the week, according to estimates developed by Sterling Marketing Inc., Vale, Ore.
Cash fed cattle prices traded at $123 to $127.50 per hundredweight last week in holiday shortened activity. Choice boxed beef cutout values increased $1.11 from the previous week, and the Choice-Select spread gained $2.38 from last Friday to close at $19.19.
Feeder cattle and calves continue to find strong buyer demand with prices quoted at $3 higher in a light test. 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 28 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 $124.14 per hundredweight, while last year’s cash prices were at $101.78 per hundredweight. One year ago feedyards were reporting average profits of $124 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 26:
- Average feedyard margins: -$15.97 per head.
- Average packer margins: -$20.84 per head.
- Sterling Profit Quotient: -60.9.
“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.