Feeding Margins Jump With Last Week’s Price Gains

Cattle feeding margins jumped back into the black last week as prices for choice fed steers moved an average of $1.53 per cwt on a live basis higher than the previous week, according to the Sterling Beef Profit Tracker published by the Farm Journal.

Packer margins last week also rose as prices for boxed beef and hides and offal rose, offsetting the higher cost of the cattle.

 

FEEDING MARGINS UP

 

The Profit Tracker’s feedlot margins for choice steers last week came to a positive $66.01 a head, compared with a negative $1.13 a week earlier.  Last week’s profitable outcome was down $16.65, or 20.1%, from a positive $82.66 a month earlier but up $41.29, or 167.0%, from $24.72 a year earlier.

To get those calculated cattle feeding returns, John Nalivka, owner and president of Sterling Marketing Inc., in Vale, Ore., used the USDA’s five-area direct price of $115.81 per cwt.  This compared with $114.28 a week earlier, $114.09 a month earlier and $119.25 a year earlier.

Feeder steers in Nalivka’s calculations were 700- to 800-pound steer prices at the Oklahoma City auction of $138.12 per cwt.  This was down $6.35, or 4.40%, from $144.47 in the week-earlier Profit Tracker, up $2.38, or 1.75%, from $135.74 a month earlier but down $112.23, or 7.52%, from $149.35 a year earlier.

Nalivka’s calculated feed cost came to $302.97 a head, up $4.34, or 1.45%, from $298.63 a week earlier, up $20.78, or 7.36%, from $282.19 a month earlier and up $9.92, or 3.39%, from $293.05 a year earlier.

That brought a calculated breakeven price for cattle sold last week to $110.96 per cwt, down $3.40, or 2.97%, from $114.36 a week earlier up $2.95, or 2.73%, from $108.01 a month earlier and down $6.47, or 5.51%, from $117.43 a year earlier.

 

PACKER MARGINS UP

 

Calculated packer margins last week came to a positive $370.23 a head, the Profit Tracker said.  This was up $49.87, or 15.6%, from $320.36 a week earlier, down $48.65, or 11.6%, from $418.88 a month earlier and down $158.35, or 30.00%, from $528.58 a year earlier.

To get that number, Nalivka used the same USDA five-area direct steer price he used to calculate feedlot margins.  He also used an average weekly beef cutout price of $233.65 per cwt, which was up $7.02, or 3.10%, from $226.63 a week earlier, down $5.54, or 2.32%, from $239.19 a month earlier and down $19.96, or 7.87%, from $253.61 a year earlier.

Nalivka also used a drop credit of $154.11 per head, up $3.01, or 1.99%, from $151.10 a week earlier, up $9.09, or 6.27%, from $145.02 a month earlier and up $32.15, or 26.4%, from $121.96 a year earlier.

 

CATTLE, BEEF RECAP

 

Fed cattle trading last week was at $115 to $116 per cwt on a live basis, up $1 from the previous week.  Dressed-basis trading was at $184 to $185 per cwt, up $3 to $4.

The USDA choice cutout Tuesday was up $5.30 per cwt at $244.83, while select was up $3.42 at $235.92.  The choice/select spread widened to $8.91 from $7.03 with 98 loads of fabricated product and 52 loads of trimmings and grinds sold into the spot market.

The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.25 to $1.27 a bushel over the May CBOT futures contract, which settled at $5.39 1/4 a bushel, down $0.07 1/2.

The CME Feeder Cattle Index for the seven days ended Monday was $139.75 per cwt, up $0.89.  This compares with Tuesday’s Apr contract settlement of $146.82 per cwt, down $0.25.