Cattle feeding margins improve, packer margins erode

A $3 per hundredweight jump in fed cattle prices helped improve cattle feeding margins by more than $30 per head last week. Still, feedyards are losing in excess of $220 on every animal they send to market. Packer margins slipped further into the red, with losses now exceeding $40 per head, according to the Sterling Beef Profit Tracker. The Sterling Beef Profit Quotient gained 92 points for the week, but the industry profitability index remains a negative 676, according to estimates developed by Sterling Marketing, Inc., Vale, Ore.

Pork producer margins declined nearly $4 per head last week, yet profits remain more than $22 per hog marketed. Negotiated cash hog prices declined $2.80 per hundredweight last week. Pork packer margins improved $6.65 per head for the week, but margins remain in the red at more than $1 per head, according to the Sterling Pork Profit Tracker.

A year ago cattle feeders sold cash cattle at $112.85 per hundredweight, resulting in losses of $70.11 per head. Last year cash hogs fetched $106.93 per hundredweight, resulting in profits of $0.91 per head.

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 4:

• Average feedyard margins: -$220.52 per head.
• Average packer margins: -$42.64 per head.
• Sterling Profit Quotient: -676.0.

The Sterling Pork Profit Tracker for the week ending August 4

• Average farrow-to-finish margins: $22.89 per head.
• Average pork packer margins: -$1.83 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.

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