Packer margins tumble on record cash trade

Packer margins dropped nearly $48 per head last week as cash cattle prices set a new record high price of $124 per hundredweight. Average packer margins ended the week modestly in the black, but cattle feeding profits soared past $250 per head as prices per hundredweight gained $1 to $3. The Sterling Profit Quotient gained 88 points for the week, according to estimates developed by Sterling Marketing Inc., Vale, Oregon.

 “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 April 2:

• Average feedyard margins: $258.99 per head.
• Average packer margins: $3.82 per head.
• Sterling Profit Quotient: 782.0.

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