The economic environment of both the beef and pork industries has changed. Capacity utilization for both beef and pork has a significant impact on margins and the market impact goes beyond supply and demand.
Beef packer margins increased $6 per head, resulting in average profits of $198 on every animal processed. Packer margins are about $72 per head better than a month ago.
A cash market rally helped add $62 per head to feedyard margins last week, ending with total average profits of $212 per head, according to the Sterling Beef Profit Tracker.
Most analysts expected feedyards to be near breakeven by the time the calendar turned to May. May is here and the underperforming cash fed cattle market has kept feedyards struggling.
Cash cattle prices may have been stuck in neutral last week, but cattle feeders saw an impressive gain in margins as the price of feeder cattle factored into closeouts dropped significantly.
Cattle feeders generally expected margins to be much better by now. An anticipated spring rally that could have erased a lot of red ink has failed to materialize, leaving feedyard closeouts stuck in neutral with near $200 losses.
Cattle feeding margins gained only modestly, despite the fact feeder cattle factored into closeouts were $40 per head less than the previous week.
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.
Beef packers saw their margins jump more than $86 per head higher last week, leaving average profits at $199, according to calculations by Sterling Marketing, Vale, Ore.
After slicing more than 50% off the monstrous losses found a month ago, cattle feeders saw their margins slip $43 per further into the red last week with $2 per cwt. lower bids.
The adjectives have all been used to describe the despair that is cattle feeding. Last week was simply worse than the week before, which was a train wreck.
Another small rally in cash fed cattle markets provided another modest improvement in feeder margins, but closeouts remain $24.66 per cwt. short of break even.