Feeding, packing margins sink on weak beef demand

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The first week of April was the worst marketing week of the year, so far, for both feedlots and packers. Cattle feeding margins declined more than $55 per head and packer margins dipped another $15 per head, according to the Sterling Beef Profit Tracker. Feedlots lost in excess of $58 on every animal sold last week, while packers lost more than $112 on every animal processed. The Sterling Beef Profit Quotient declined 170 points for the week, according to estimates developed by Sterling Marketing, Inc., Vale, Ore.

Boxed beef cutout values fell sharply lower last week, with Choice boxed beef trading Friday at $177.61 per hundredweight, down $5.75 from the previous week, and down $9.80 from two weeks ago. Cattle and beef markets continued to feel the effects of softer consumer demand due to the fallout from the lean fine-textured beef (LFTB) controversy. The 50-percent trim, the product most damaged by the “pink slime” debacle, continued to decline. In February the 50-percent trim was priced at $100 per hundredweight, but is selling for roughly half that now.

Pork producer margins also declined last week, with profits now below $10 per head. Pork packer margins declined $2.76 per head, resulting in losses of $10 per head, according to the Sterling Pork Profit Tracker.

Cash fed cattle traded at $121.73 per hundredweight last week, down nearly $3, while Western Corn Belt negotiated hog prices were $82.96 per hundredweight.

A year ago cattle feeders sold cash cattle at $122.72 per hundredweight which resulted in profits of $262.49 per head. Last year cash hogs fetched $89.68 per hundredweight resulting in profits of $27.76 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 April 7:

  • Average feedyard margins: -$58.73 per head.
  • Average packer margins:   -$112.10 per head.
  • Sterling Profit Quotient: -206.0.

The Sterling Pork Profit Tracker for the week ending April 7:

  • Average farrow-to-finish margins:  $9.68 per head.
  • Average pork packer margins:   -$10.00 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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