It’s the best signal cattle feeders have seen in many months. Average closeouts lost less money than the previous week despite the fact cash fed cattle prices retreated $1 per cwt.
Cattle feeders recorded average losses of $141 per head, a significant loss for sure, but $14 better than the previous week and $124 better than a month ago, according to the Sterling Beef Profit Tracker.
Last week’s $1 per cwt. retreat in cash fed cattle prices left USDA’s 5-area direct cash price at $135.75 per cwt. The steady improvement in feedyard closeouts is due to steadily decreasing costs for the feeder cattle that factors into those closeouts, according to John Nalivka, Sterling Marketing, Inc., Vale, Ore. Feeder cattle placed against last week’s marketed fed cattle cost an average of $189.44, about $35 per head less than the week before, and $135 less than a month ago. The total cost of finishing cattle marketed last week was $1,913 per head.
Beef packer margins showed a modest improvement last week, earning $12 per head. Packer margins are about $20 per head lower than a month ago.
Sterling Marketing estimates feedyards lost a cumulative unhedged $4.7 billion in 2015, with average weekly losses of $239.26 per head. That compares to an unhedged profit of $3.9 billion in 2014, and losses of $1.1 billion in 2013.
A month ago cattle feeders were losing $265 per head, while a year ago feedyard closeouts were $153 in the red, according to Sterling Marketing. Feeder cattle represent 77% of the cost of finishing a steer, compared with 81% a year ago.
A month ago beef packers were earning $32 for every animal processed, while a year ago packers were making $4 per head, Sterling Marketing estimates.
Farrow-to-finish pork producers found profits of $2.88 per hog last week, nearly steady with the previous week, and $5 per head better than the $2 per head loss found a month ago.
Pork packers saw a $2.64 increase in profit margins to $9.47 per head. Negotiated prices for lean hogs were $64.95 per cwt. last week, down a $0.92 per cwt. from the previous week. Cash prices for fed cattle are $25 per cwt. lower than last year, and negotiated hog prices are $1.92 per cwt. lower than last year.
Sterling Marketing projects 2016 average cash profit margins for cow-calf producers at $263 per cow. Last year’s estimated average cow-calf margins were $432 per cow. Cow-calf profits for 2014 were estimated at $517 per cow.
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