As the National Cattlemen’s Beef Association calls on President Trump to investigate cattle and beef price relationships, the Sterling Beef Profit Tracker shows the widening rift between packer and feeder returns.
Various news reports say the NCBA and Nebraska Senator Deb Fisher asked the president to investigate possible irregularities in the cattle markets over the last several weeks.
The Beef Profit Tracker, as reported by the Farm Journal, said beef packer margins declined $191 a head, or 34% last week while packers were making roughly $370 a head. Feeders had closeouts go to near $80-a-head losses from almost $25-a-head profits in one week last week.
FEEDLOT MARGINS HIT THE SKIDS
The Beef Profit Tracker’s estimated returns to unhedged cattle feeders on cattle sold to packing plants last week was a minus $79.64 a head, compared with profits of $24.72 a week earlier. A month earlier, losses were calculated at $21.93 a head, and year-ago profits were estimated at $68.64.
To get to last week’s estimated feedlot returns, John Nalivka, owner of Sterling Marketing and author of the Beef Profit Tracker, used the USDA’s five-area direct average price for fed cattle of $110.83 per cwt. This was down from the $119.25 the previous week, the $112.44 from the same week a month earlier and the $124.59 from the same week a year earlier.
Behind that sale price was the estimated average purchase price of 750- to 800-pound feeder steers from the Oklahoma City Auction of $148.42 per cwt. This price was below the $149.35 cost of the feeder steers sold as fed cattle last week, but above the $145.16 for those sold a month earlier and below the $156.16 for cattle sold a year ago.
The cost of feed for cattle sold as fed cattle to packers last week came to $290.41 a head, down from $293.05 a week earlier, but up from $280.95 for fed cattle sold a month earlier and $266.21 for cattle marketed in the same week a year ago.
That brought a total cost for last week’s fed cattle sales to $1,586.92 a head, compared with $1,597.08 a week earlier, $1,551.11 a month earlier and $1,625.79 a year earlier.
Taking data from the same sources, the calculated breakeven price for feeder steers entering the feedlot last week was $100.98 per cwt, compared with $106.47 a week earlier, $106.93 a month earlier and $115.63 a year ago.
PACKER RETURNS DECLINE
Packer margins declined on cattle purchased last week as the restocking frenzy from meat buyers eased. The Beef Profit Tracker estimated packer returns at $370.34 a head, down from $561.60 the week before but up from $144.77 a month earlier and up from last year’s $146.48.
The USDA’s beef cutout last week was $236.90, down from $253.61, but up from $206.25 a month earlier and up from $225.48 a year earlier.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains this week at $105 per cwt on a live basis, down $7 to $8 from last week. Dressed-basis trade last week was at $178 to $180, down $10 from the previous week.
The USDA choice cutout Wednesday was down $5.54 per cwt at $222.34, while select was off $5.98 at $211.77. The choice/select spread widened to $10.57 from $10.13 with 92 loads of fabricated product sold into the spot market.
There were no deliveries against the Apr futures contract tendered on Wednesday.
The CME Feeder Cattle index for the seven days ended Tuesday was $116.79 per cwt, down $0.26. This compares with Wednesday’s Apr contract settlement of $119.87, up $4.95.