Cattle feeding margins improved more than $50 per head last week, climbing to an average of $60.07. Packer margins improved, but remained at $45.57 below breakeven. The Sterling Profit Quotient improved more than 150 points for the week.
The significant increase in feedyard margins was achieved even though fed cattle prices did not increase. “Feedlot margins were positive simply because the price of those cattle when they were placed on feed was more manageable in today's environment of soft demand for beef,” says Sterling Marketing president John Nalivka. “Bidding too much into the cattle to utilize capacity - whether it is bunk space in the feedlot, or slaughter capacity at the packing plant - is not a good situation, and packer margins continue to illustrate that point. With declining cattle numbers, there is too much capacity across the industry, and fighting this situation is not the answer.”
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 7/25/09:
- Average feedyard margins: $60.07 per head.
- Average packer margins: -$45.57 per head.
- Sterling Profit Quotient: 169.4
For more information and a chart, click here
The Sterling Beef Profit Tracker is produced by Sterling Marketing Inc. and John Nalivka, president, Vale, Ore., and is published weekly by Drovers/CattleNetwork.