Last week’s sharp drop in boxed beef values whacked 32% off estimated beef packer gross profits, but they still are thought to be making more than $300 for each fed steer slaughtered.
The calculations came from the Sterling Beef Profit Tracker, out of Sterling Marketing Inc., published by Drovers.
But cash cattle prices also declined against a higher price for the feeder cattle that were sold as fed cattle last week, taking estimated average feedlot margins down by about 91%.
PACKER MARGINS STILL LARGE
The Profit Tracker had average estimated gross packer margins on the cattle purchased for slaughter last week at a positive $332.54 a head, down $157.82, or 32.2%, from $490.36 a week earlier and down $42.18, or 11.3%, from $374.72 a month earlier. However, it was up $157.06, or 89.5%, from $175.48 in the same week a year ago.
To get that margin result, John Nalivka, owner of Sterling Marketing and author of the Beef Profit Tracker, used the USDA’s five-area direct price for fed steers of $105.99 per cwt, which was down $3.56, or 3.25%, from $109.55 a week earlier, down $3.51, or 3.21%, from $109.50 a month earlier and down $13.22, or 11.1%, from $119.21 a year earlier.
An average beef cutout value of $217.90 per cwt was used. This was down $19.86, or 8.35%, from $237.76 a week earlier and down $2.85, or 1.29%, from $220.75 a month earlier but up from $216.90 a year earlier.
Nalivka also factored in the average drop credit from USDA data. Last week’s average drop credit of $133.62, was $2.73, or 2.09%, more than the $130.89 of a week earlier, $2.64, or 2.02%, more than the $130.98 of a month earlier but $4.52, or 3.27%, less than the $138.13 of a year earlier.
FEEDER MARGINS DROP
Feeder margins, however, dropped sharply last week to a calculated average of $10.19 a head for unhedged cattle feeders. This was down $97.99, or 90.6%, from $108.18 a week earlier, down $78.30, or 88.5%, from $88.49 a month earlier and down $58.15, or 85.1%, from $68.34 a year earlier.
To arrive at that margin number, Nalivka used the choice steer price of $105.99 per cwt and a feeder steer price of $133.38 per cwt, which was up $4.30, or 3.33%, from $129.08 for cattle marketed two weeks ago, up $2.47, or 1.89%, from $130.91 for those sold a month ago but down $6.17, or 4.42%, from $139.55 for those sold a year ago.
A total feed cost of $263.57 a head was used, versus $248.52 a week ago, $252.87 a month ago and $324.85 a year ago.
CATTLE, BEEF RECAP
Fed cattle trade was reported in the Plains this week at $105 to $108 per cwt on a live basis, steady to down $1 from last week. Dressed-basis trading was at $165 to $166, down $3 to $4.
The USDA choice cutout Thursday was up $2.29 per cwt at $209.51, while select was up $1.61 at $193.70. The choice/select spread widened to $15.81 from $15.13 with 82 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA reported Thursday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.05 to $1.10 a bushel over the Mar CBOT futures contract, which settled at $4.32 1/2 a bushel, up $0.05 1/4.
Ten steer contracts were tendered for delivery against the Dec contract Thursday; 35 were retendered at one.
The CME Feeder Cattle Index for the seven days ended Wednesday was $137.19 per cwt, up $0.55. This compares with Thursday’s Jan contract settlement of $140.97 per cwt, up $0.12.