Feeder margins improve despite rising feed costs, steady sales

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Although feeder margins didn’t drastically improve last week, they did well in the face of rising feed costs and steady cash sales of Choice steers which remained at $123 per cwt, according to the Sterling Beef Profit Tracker.

Feedlot margins remained negative last week, but improved by $1.57, averaging -$57.96 per head. Last week’s feeder margins are less than half as bad as a month earlier when cash sales were $119 per cwt and losses averaged -$124.83 per head according to the Sterling Beef Profit Tracker.

Feeder margins were relieved by lower total costs which fell $25.85 per head last week.

The feedlot calculated breakeven price improved by $1.99 per cwt compared to the previous week, but at $132.39 per cwt, last week’s breakeven was 45 cents higher than a month earlier.

Beef packer margins declined last week, down $1.96 per head compared to the previous week. Packer margins are $3.31 per head higher than a month earlier and $26.93 higher than a year earlier when the average was -$8.66 per head according to estimates by Sterling Marketing, Inc., Vale, Ore.

Although pork producer margins decreased by $5.62 per head last week, they remain positive by averaging $5.96 per hog last week according to the Sterling Pork Profit Tracker.

Negotiated cash hog prices were $4.19 lower per hundredweight to $89.91. Hog prices continue to fall, now $9.26 per hundredweight lower than a month earlier, however last week’s prices are more than 10 dollars above averages from a year ago.

Last week’s margins were hindered by higher feed costs which increased by $2.49 for last week’s finishing placement and a higher breakeven price, up $1.26 compared to a week earlier. Both figures are still considerably lower than this time last year.

Pork packer margins took advantage of lower cash hog prices, improving their margins by $1.98 per head last week. Pork packer margins averaged $8.06 per head last week which was $3.10 per head lower than a year earlier when cash hogs sold for $76.56 per hundredweight according to the Sterling Pork Profit Tracker.

The Sterling Beef and Pork Profit Trackers are calculated using actual weekly prices for both cattle and hogs, feed costs, beef and pork cutout prices, drop credits and other factors that influence profit margins.

The Sterling Beef Profit Tracker for the week ending August 31:

  • Average feedyard margins: -$57.96 per head.
  • Average packer margins: $18.27 per head.

The Sterling Pork Profit Tracker for the week ending August 30:                                          

  • Average farrow-to-finish margins: $5.96 per head.
  • Average pork packer margins: $8.06 per head.

The Sterling Beef and Pork Profit Trackers are produced by Sterling Marketing Inc. and John Nalivka, president, Vale, Ore., and are published weekly by Drovers/CattleNetwork, and PorkNetwork.



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