Estimated beef packer margins expanded again last week, while cattle feeding margins remained in the red, according to Sterling Marketing Inc.’s weekly Beef Profit Tracker.
The Profit Tracker, which is published by Drovers, showed estimated feedlot returns on unhedged, slaughter-ready cattle sold to packers last week at a minus $24.80 a head, compared with estimated packer profits of $303.63 a head.
FEEDLOT RETURNS NEGATIVE
Feedlot returns on fed cattle sold for slaughter faded last week to a minus $24.80, down $14.41, or 138.7%, from a minus $10.39 the previous week, the Profit Tracker said. However, this was far better than the estimated $154.61 losses feeders swallowed a month ago, which were up $129.81, or 84.0%.
A year earlier, feedlot returns were a positive $36.27 a head.
To arrive at the latest estimated feedlot returns, John Nalivka, owner of Sterling Marketing Inc., and the person who generates the Beef Profit Tracker every week, used the USDA’s five-area direct price for choice steers of $110.38 per cwt. This was up $0.33, or 0.30%, from $110.05 a week earlier and up $6.48, or 6.24%, from $103.90 a month earlier. However, it was down $3.65, or 3.20%, from the $114.03 received by feeders in the same week a year ago.
Nalivka also used a feeder steer price from the Oklahoma City auction market of $141.61 per cwt for a 750- to 800-pound steer. This was up $0.27, or 0.19%, from $141.34 per cwt a week earlier but down $6.04, or 4.09%, from $147.65 a month earlier but up $1.33, or 0.95%, from $140.28 a year earlier.
For the latest calculations of sales returns, Nalivka estimated feed costs of $282.03 a head, up $16,44, or 6.19%, from $265.59 a week earlier, and up $6.82, or 2.48%, from $275.21 a month earlier but down $2.64, or 0.93%, from $284.67 a year earlier.
That all came to an estimated breakeven price of $117.70 per cwt for cattle sold last week, compared with $117.52 a week earlier, $114.14 a month earlier and $119.54 a year earlier.
PACKER PROFITS JUMP
The beef packer margin tends to weaken into the end of the year, according to the Livestock Marketing Information Center, but this year it has jumped sharply in a counter-seasonal move after Tyson’s fire at its Finney County, KS, beef plant.
The Beef Tracker estimated the margin for cattle purchased last week at a positive $303.63 a head, compared with $265.30 a week earlier, $331.01 a month earlier and $218.09 a year earlier.
To get there, Nalivka used the $110.38 price of fed steers plus a beef cutout of $218.54 per cwt and a drop credit of $132.58.
CATTLE, BEEF RECAP
Cash cattle trading took place Wednesday at $112 per cwt on a live basis, up $1 to $4 from last week. Dressed-basis trading was reported last week at $174 to $175 per cwt, steady to up $1 from the previous week.
The USDA choice cutout Thursday was up $2.13 per cwt at $232.18, while select was off $0.18 at $206.49. The choice/select spread widened to $25.69 from $23.38 with 97 loads of fabricated product sold into the spot market.
Three heifer contracts were tendered for delivery against the Oct live cattle futures contract Thursday.
The CME Feeder Cattle index for the seven days ended Wednesday was $145.23 per cwt, up $0.15 from the previous day. This compares with Thursday’s Oct contract settlement of $145.95, down $0.07, and the Nov settlement of $147.60, down $0.27.