Cattle Feeding Margins Drop

Cattle feeding margins dropped last week as the calculated average cost of the feeder cattle that went into the fat cattle rose, according to the Sterling Profit Tracker.

The calculations, published by AgWeb, show feed yard closeouts had a $108.70-per-head loss last week, a significant decline from $11.71 the previous week.  A month ago, feedlots were losing $270.27 a head, but year-ago profit of $302.56 on each animal sold to packers now seems like wishful thinking.

With total costs for slaughter-ready cattle last week totaling $2,079.05 a head, feedlots needed a sale price of $159.31 per cwt on a live basis to break even.  They got $150.95.

A week earlier, the sale price was only slightly higher at $151.14, versus a breakeven of $152.04.  A month ago, feedlots were getting $153.16 because the price of the feeder cattle was significantly higher at $232.72 per cwt, as opposed to the $210.22-per-cwt price that went into this week’s sales to packers.

Interestingly, the packer sale price a month ago was $153.16, but the price of the feeder cattle that went into those sales was significantly higher at $232.72 per cwt.

Feed costs for cattle sold last week were estimated at $311.77 a head, up slightly from the previous week’s $311.32 and down significantly from the $320.45 used for the month-earlier calculations.  However, a year ago, feed costs on cattle sold to packers amounted to $346.80 a head.




But if feedlot margins dropped last week because of the price paid for feeder cattle, packer margins also fell sharply as beef prices and the drop credit continued to work lower.

The Profit Tracker said packing plants made $33.42 a head on the cattle purchased last week if they sold all the beef and by-products at last week’s prices.  A week ago, the calculated packer margin was a plus $140.05, and a month earlier, it was a plus $34.72.  A year ago, the estimated packer margin was a plus $53.30.

The adjusted beef cutout value last week was calculated at $241.57 per cwt, down from $251.42 a week earlier, last month’s $245.00 and the $248.64 a year earlier.  The “drop credit,” though, continued to drop.

Last week’s drop credit was $173.20, compared with $173.45 the previous week, $188.72 the previous month and $214.23 a year ago.




But whatever the feedlot or the packer make or lose from the sale of each animal sold, nothing currently compares with cow/calf producer margins.  Annual income per cow was estimated at $658.00, compared with last year’s $548.00, 2013’s $243.05 and $213.65 in 2012.

It’s little wonder that producers are working to expand their herd size now that abundant rains have given new life to once-parched pastures.




Cash cattle markets are quiet and could remain quiet for most of the week.  Bids were posted Tuesday at $236 per cwt on a dressed basis in Nebraska, but asking prices remain close to $245.  Asking prices on a live basis were around $152 to $153.

Plains markets weakened slightly last week, with a few trades at $151 to $152 per cwt on a live basis giving way to a steady $150 market.  On a dressed basis, cattle traded last week at $238 to $241, also about steady.

The USDA’s afternoon choice beef cutout value was up $0.04 per cwt at $236.04, while the select value was $233.96, up $1.26.  Volume was lackluster at 83 loads of fabricated product being sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $224.35 per cwt, down $0.16, compared with the Aug settlement of $214.30.