Cattle feeding margins went up last week, compared to the week before, but beef packer margins went up even more, although both are in the black, according to the Sterling Beef Profit Tracker, from Sterling Marketing Inc., and published by Drovers.
The calculated unhedged feedlot margin for fed steers last week was 95.80 a head, up $7.31, or 8.26%, from $88.49 a week earlier, up $55.13, or 135.6%, from $40.67 a month earlier and even up $71.63, or 296.4%, from $24.17 a year earlier.
By comparison, beef packer margins last week were estimated at $439.60 per head, up $66.94, or 18.0%, from $372.66 a week earlier, up $182.21, or 70.8%, from $257.39 a month earlier and up $73.93, or $20.2%, from $365.67 a year earlier.
FEEDING MARGINS BY THE NUMBERS
To arrive at the new profit margins, John Nalivka, owner and president of Sterling Marketing, used the average USDA five-area direct price of $109.34 per cwt. This was down $0.16, or 0.15%, from $109.50 a week earlier but up $4.85, or 4.64%, from $104.49 a month earlier and down $1.60, or 1.44%, from $110.94 a year earlier.
Nalivka also used a feeder steer price of $129.82 per cwt for the calves marketed last week as fed steers. He got it from the Oklahoma City Auction price for $750- to 800-pound steers. This price was down $1.09, or 0.83%, from $130.91 per cwt a week earlier, up $0.51, or 0.39%, from $129.31 a month earlier and down $8.85, or 6.38%, from $138.67 a year earlier.
Average feed costs for steers marketed last week were estimated at $252.09 a head, down $0.78, or 0.31%, from $252.87 a week earlier but up $6.67, or 2.72%, from $245.42 a month earlier and down $79.43, or 24.0%, from $331.52 a year earlier.
For calves that went on feed last week, a feeder steer price of $135.95 per cwt was used, along with an estimated feed cost of $340.98 per head to arrive at a breakeven price of $112.51.
PACKER MARGINS BY THE NUMBERS
Beef packer margins on cattle purchased last week came to $439.60 a head, up $66.94, or 18.0%, from $372.66 a week earlier, up $182.21, or 70.8%, from $257.39 a month earlier and up $63.93, or 17.0%, from $375.67 a year earlier.
To get that margin, Nalivka used a choice steer price of $109.34 per cwt, an average beef cutout value of $231.53 per cwt and a drop credit value of $132.01 per head. A year ago, choice steers were $115.94 per cwt, the cutout was $233.02 per cwt and the drop credit was $135.67 a head.
CATTLE, BEEF RECAP
Fed cattle trading this week was seen at $110 to $111 per cwt on a live basis, steady to up $1 from last week. Dressed-basis trading was reported at $171 to $174 per cwt, down $1 to up $2.
The USDA choice cutout Wednesday was up $0.76 per cwt at $245.06, while select was up $1.19 at $220.90. The choice/select spread narrowed to $24.16 from $24.59 with 94 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.05 to $1.12 a bushel over the Dec CBOT futures contract, which settled at $4.20 a bushel, down $0.05 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $137.30 per cwt, up $0.18. This compares with Wednesday’s Jan contract settlement of $140.17 per cwt, up $1.57.