Feedyard closeouts declined an average of $20 per head, leaving losses at $265 per head last week, according to the Sterling Beef Profit Tracker. Poorer margins were a result of a $2 per cwt. decline in USDA’s 5-area direct cash price to $135.15.
Declining feeder cattle prices have factored into closeouts in recent weeks, still the total cost of finishing the cattle harvested last week was roughly $2,030. Cattle placed on feed last week are projected to cost roughly $400 per head less to reach finish weight than last year, the bulk of that from lower feeder cattle prices, according to calculations by John Nalivka, president of Sterling Marketing, Vale, Ore.
Beef packers saw their margins decline more than $14 per head last week, leaving average profits at $33 per head. Packer margins are about $79 per head lower than last month.
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 $383 per head, while a year ago feedyard closeouts were $32 in the red, according to Sterling Marketing. Feeder cattle represent 79% of the cost of finishing a steer.
A month ago beef packers were earning $112 for every animal processed, while a year ago packers were losing $54 per head, Sterling Marketing estimates.
Farrow-to-finish pork producers lost $2 per hog last week, a $4 per head improvement from the previous week, and $21 per head better than the $23 per head loss found a month ago.
Pork packers saw a $3 decline in profit margins to $16 per head. Negotiated prices for lean hogs were $63.66 per cwt. last week, a decline gain of $2.43 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 per cwt. lower than last year.
Sterling Marketing projects 2016 average cash profit margins for cow-calf producers at $237 per cow. Last year’s estimated average cow-calf margins were $429 per cow. Cow-calf profits for 2014 were estimated at $526 per cow.
More from AgDay: