Beef packers received a windfall as beef prices surged over the last two weeks, so Tyson Foods announced Friday that it would add $5 per cwt to the negotiated live-basis price of fed cattle and $7.94 to the dressed-basis price this week.
And, according to the Sterling Beef Profit Tracker published by Drovers, Tyson and other beef packers have plenty of love to pass around.
FEELING THE LOVE
The Profit Tracker calculated a return to packers last week of $504.43 a head, up $328.78, or 187.2% from $175.65 a week earlier, up $435.41, or 630.8%, from $69.02 a month earlier and up $371.84, or 280.4%, from $132.59 a year earlier.
To arrive at that calculated positive margin, John Nalivka, owner of Sterling Marketing, which publishes the Profit Tracker, used the USDA’s five-area direct, live-basis price of $109.93 per cwt for choice steers. This was up $1.16 per cwt, or 1.07%, from $108.77 per cwt a week earlier, but down $9.73, or 8.13%, from the month-earlier price of $119.66 and down $18.36, or 14.3%, from the year-earlier price of $128.29.
The average price for the beef cutout last week was figured at $241.73 per cwt, up $35.57, or 17.3%, from $206.16 the week before, up $36.38, or 17.7%, from $205.35 the month before and up $14.19, or 6.24%, from $227.54 a year earlier.
The credit for the hide and offal, called the drop credit, for each animal slaughtered was $123.60, down $3.45, or 2.72%, from $127.05 the week before, down $12.02, or 8.86%, from $135.62 the month before and down $7.29, or 5.57%, from $130.89 the year before.
NEGATIVE FEEDLOT MARGINS
Meanwhile, unhedged feedlot margins last week were calculated at a negative $89.49 a head, up from a negative $90.48 but down from a positive $161.70 a month earlier and down from a positive $135.69 a year earlier.
To arrive at that margin calculation, Nalivka used the same USDA five-area direct price of $109.93 per cwt, up from $108.77 a week earlier but down from $119.66 a month earlier and down from $128.29 a year earlier that he used to calculate packer margins.
The average calculated cost of the feeder cattle for last week’s sales to packers came from the Oklahoma City auction price of $147.26 per cwt for 750- to 800-pound feeder steers. This was up from $146.44 for cattle sold to packers the week before, up from $134.61 a month earlier but down from $153.61 for cattle sold to packers a year ago.
The calculated feed cost for the fed cattle sold to packers last week was $297.23 per head, compared with $289.17 a week earlier, $279.24 a month earlier and $269.93 a year earlier.
That left a calculated breakeven price of $116.51 per cwt for cattle sold last week, versus $115.42 a week earlier, $107.77 a month earlier and $118.31 a year earlier.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains this week at $119 to $120 per cwt on a live basis, up $7 from last week, and at mostly $190 on a dressed basis, up $5 to $10.
The USDA choice cutout Wednesday was down $1.01 per cwt at $255.30, while select was off $2.39 at $243.09. The choice/select spread widened to $12.21 from $10.83 with 93 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $123.44 per cwt, up $5.21. This compares with Wednesday’s Mar contract settlement of $132.07, up $1.85, and the Apr settlement of $128.72, down $1.35.