Estimated average cash-basis cattle feeding margins rose last week as fed cattle prices were about $2 per cwt higher than the previous week, according to Sterling Marketing’s Beef Profit Tracker, published by AgWeb.
Packer margins, however, declined a bit but still remained profitable.
AgWeb said Sterling Marketing’s President John Nalivka, said the Beef Profit Tracker has no curve to calculate an increased cost of feeding cattle in the winter. Wintry weather is nowhere near uniform across the country, and it would be impossible to figure it in. The Profit Tracker is meant to be only a benchmark for industry-wide average returns from feeding cattle on a cash basis.
CATTLE FEEDING MARGIN UP
The new cattle feeding margin for cattle sold to packers last week was $149.54 a head, up $5.16, or 3.57%, from $144.38 a week earlier and up $47.80, or 47.0%, from $101.74 a month earlier. The new level even was up $34.90, or 30.4%, from $114.64 in the same week a year earlier.
To arrive at that estimated rate of return, Nalivka used the USDA’s five-area direct selling price of $128.08 per cwt. This was up from $125.97 a week earlier and $123.92 a month earlier. It also was up from $126.31 a year earlier.
The average price of the feeder cattle grown to last week’s marketed cattle was the Oklahoma City auction price $151.74 per cwt for 750- to 800-pound feeder steers. This compares with $150.40 per cwt for the feeder cattle sold as fed cattle two weeks ago and a price of $150.55 for the feeder cattle that went into fed cattle sales a month earlier. However, it was down from the $153.84-per-cwt price for the feeder cattle sold as fed cattle in the year-ago week.
The estimated feed cost for the fed cattle sold to packers last week was $269.00 a head. This was up from $256.44 for the cattle sold for slaughter the previous week, but was only slightly below the $269.78 estimated feed cost for cattle sold a month earlier. It was above the estimated feed cost of $266.67 a head for cattle sold to packers a year earlier.
LOWER FEEDER PRICES MAY HELP THE NEXT GO-ROUND
Lower prices for feeder cattle replacements may help the bottom lines of feedlots when they are sold for slaughter, the Profit Tracker said.
The estimated cost of the 750- to 800-pound feeder steers placed on feed last week was $140.01 per cwt, which was down from the cost of the feeder cattle that went into the fed cattle sold for slaughter last week. However, the feeder cattle cost was above the $137.92 of a week earlier and the $139.63 of those purchased a month earlier, even though it was below the $144.42 cost of feeder steers a year earlier.
Feed costs were expected to be higher at $284.93 a head for those placed last week. This was down from the $286.84 of a week earlier and the $289.32 of a month earlier and the $287.62 of last year.
CATTLE, BEEF RECAP
Cash cattle trade was reported at $128 to $128.50 per cwt on a live basis this week and at $203 to mostly $205 dressed versus $128 and $205 last week.
The USDA choice cutout Thursday was up $1.11 per cwt at $226.04, while select was up $0.17 at $218.54. The choice/select spread widened to $7.50 from $6.56 with 75 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $139.76 per cwt, up $0.17. This compares with Thursday’s Mar contract settlement of $142.90, up $2.25.