Cash Cattle Price Jump Not Enough For Feeders

Last week’s wild $8- to $10-per-cwt jump in cash cattle prices certainly helped the plight of cattle feeders stuck in a quagmire of money-losing cattle, but it was far from enough to get them back into profitability.

According to Sterling Marketing’s weekly Beef Profit Tracker, which uses the USDA’s five-market average price for slaughter-ready cattle as its base, the $134.09 per cwt that feed yards received for cattle going to slaughter this week fell well short of the $163.74 needed to break even.  In other words, they still lost $385.49 on every head sold to the packers.

The only consolation unhedged feeders can take home is that the week before, they were losing $474.54 a head.  A month ago, losses were $357.47 each.




Packers, meanwhile, lost profitability but remained in the black.  The Sterling Profit Tracker, which is published by AgWeb, calculated packer margins at about $51.05 a head in the wake of last week’s markets, down from $116.09 the week before.

A month ago, packers were pulling down $131.99 a head on each animal purchased and processed.  A year ago, though, packers were losing $44.94 per head.




For last week’s profitability calculations, Sterling used the USDA’s five-area direct price of $134.09 per cwt against the Oklahoma City price for 750- to 800-pound steers of $218.88 and a feed cost of $299.64 per head.

Total costs for cattle sold last week were estimated at $2,136.66 a head, leaving a breakeven of $163.74 per cwt.

But while estimated costs and breakevens for cattle placed on feed this week are down from those levels, the estimated price needed to break even on cattle placed on feed last week still seems unreasonable high.  Estimated costs totaled $1,928.55 a head, leaving a necessary breakeven of $147.73.

Yet while cattle futures are surging now, most market analysts give the market little chance of reaching those breakeven levels any time soon.




Seasonal tendencies of grocery stores to feature beef in early November reportedly are on track.  Last-minute, fill-in buying for these planned pushes on beef at the retail level may be behind last week’s price gains.

There is widespread speculation that packer buyers were caught short of fed cattle for this week’s slaughter schedules, but there also were reports that the fill-in buying was active, given the heavy volumes that were sold into the spot market.

Beef features in early November likely will focus on roasts, less-expensive steak items and ground beef.  These will give way to turkey and ham ads for the Thanksgiving Day holiday.

The week after Thanksgiving usually is a low-volume week for any meat, but beef ads resume in December, ending with surf-and-turf specials for the New Year’s holiday.




Cash fed cattle markets last week traded on Friday after the futures market closed.  Prices were mostly $134 to $136 per cwt on a live basis, well up from $123 to mostly $126 to $127 the previous week.  On a dressed basis, cattle traded in a range from $205 per cwt to $214.50.

A smattering of trades at those levels were reported over the weekend.

Wholesale beef prices Monday continued to move higher.  The USDA reported its choice cutout value at $213.64 per cwt, up $1.95 on the day, and its select cutout at $207.73, up $1.37.

The choice/select spread widened to $5.91 from $5.33 on Friday, and there were 81 loads of fabricated product moved into the spot market.

CME Feeder Cattle Index for the seven days ended Friday was $190.78 per cwt, up $2.77.  This compares with the Oct settlement Monday of $195.00, up $1.20.