Cattle Feeder, Packer Margins Less Red

Cattle feeders continued to lose money last week, but higher fed cattle prices eased the flow of red ink a little.  The situation was similar for beef packers as product prices rose during the week.

Sterling Marketing’s Beef Profit Tracker said unhedged feedlots last week lost an estimated average of $128.80 for each fed steer or heifer sent to slaughter.  This was up from a loss of $171.82 last week and up from the $150.33 negative margin of a month ago.  A year earlier, feedlots were making an estimated average of $242.03 a head.

Interestingly, USDA 5-area direct fed cattle prices a year ago were reported at $152.89 per cwt, $12.88, or 8.42%, below last week’s $165.77.  Feed costs last year also were much higher, with an estimated per-head average feed cost then of $375.40 being $151.66, or 40.4%, above last week’s $223.74.

The difference lies in the cost of feeder cattle.  Feeder cattle that were sold as slaughter-ready cattle last week were estimated to have cost an average of $239.05 per cwt, $73.33, or 44.2%, more than last year’s $165.72.




Feeder steer prices have resumed their upward path and are following last year’s trend higher, preserving the trend of record-high replacement costs for feedlots.

A graph from the Livestock Marketing Information Center shows how 700- to 800-pound feeder steers in the Southern Plains reversed a January trend lower and are now working higher.

Feeder cattle in the Southern Plains last week were listed at $222.17 per cwt, $45.80, or 26.97%, above last year’s $176.37 and $96.99, or 77.48%, above the previous five-year average of $125.18.

Tight supplies of feeder cattle at auctions would indicate projected highs later in the year will exceed this year’s high of $234.75 per cwt.  They may even exceed last year’s record high for any week at $229.59, set the first week of August.




Packer losses for cattle purchased last week also were estimated to be down from the previous week as the adjusted wholesale beef cutout price rose to $248.13 per cwt from $245.86 a week earlier.  A month ago, the adjusted cutout was $244.95, and a year ago, it was $238.01.

The hide and offal value, collectively known as the drop credit, also rose, giving packers a little more margin help.  The drop credit last week was $204.13 a head, versus $201.00 a week earlier and $198.47 a month ago.  A year earlier, the drop credit was $216.34.




Cash cattle markets Wednesday remained quiet.  Only a few scattered bids were reported in Nebraska’s dressed market at $260 per cwt, but no sales resulted since asking prices were $266 to $268.  Cattle traded last week at $262 to $263 on a dressed basis.  No live-basis bids were reported, but asking prices held at $167 to $168, and trade last week was mostly $165.

Feedlot showlists were down in most major feeding areas except Texas, which may give cattle owners a little more negotiating leverage with packer buyers this week, especially when boxed beef prices are figured in.

Boxed beef prices were higher Wednesday with the USDA’s choice cutout rising $1.29 per cwt to $255.42 and select up $1.57 to $250.21.  Volume was heavy, with 135 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $218.65 per cwt, down $0.24.