The march toward break even for cattle feeders stumbled last week as average losses increased $36 per head, leaving closeouts $113 in the red, according to the Sterling Beef Profit Tracker.
Feedyard margins have improved steadily the past six weeks, finally falling the below the triple digit loss mark two weeks ago for the first time in more than a year.
The retreat for feeding margins comes despite a $1 gain in cash cattle prices. USDA’s 5-area direct price was $139.04, yet breakeven prices increased to $147.73 due to higher feeder cattle prices calculated against last week’s marketings.
Feeder cattle prices averaged $192.24 against the fed cattle sold last week, an increase of roughly $50 per head more than the previous week, according to John Nalivka, president of Sterling Marketing, Vale, Ore. The total cost of finishing cattle marketed last week was $1,928 per head.
Beef packer margins improved $54 per head, earning profits of $93 per animal. Packer margins are about $78 per head better 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 $224 per head, while a year ago feedyard closeouts were $172 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 $15 for every animal processed, while a year ago packers were losing $48 per head, Sterling Marketing estimates.
Farrow-to-finish pork producers found profits of $6.10 per hog last week, about double the $3.05 profits of a week earlier.
Pork packers saw a $3 increase in profit margins to $12.62 per head. Negotiated prices for lean hogs were $64.69 per cwt. last week, down $1 per cwt. from the previous week. Cash prices for fed cattle are $24 per cwt. lower than last year, and negotiated hog prices are $4 per cwt. higher 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.