Economic Indicators: Margins erode for feeders, packers

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click image to zoom Average monthly prices for all classes of cattle were flat again during November. Cattle feeders and beef packers found their profit margins continuing to erode during the month. Feedyards have now seen negative margins on closeouts for eight consecutive months. Supplies of market-ready cattle will increase during December, suggesting that prices may not improve enough to eliminate the losses. Production costs declined modestly during November and the steer-corn ratio improved modestly. Pork and poultry remain competitive as their production increased and retail prices fell during the month. Calf and yearling prices will remain strong throughout the coming months as supplies continue to dwindle. Packers will continue to struggle with poor margins through the end of the year as boxed-beef prices are already at levels creating consumer resistance.

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