Cattle Feeding Margins Improve; Still Red

Cattle feeding margins improved substantially with the cattle sold for slaughter last week, but they remain negative by nearly $50 a head.

The calculations were made by John Nalivka, president of Sterling Marketing of Vale, Ore., and author of the Sterling Profit Tracker, which is published by AgWeb.

Calculations showed that the average loss for unhedged cattle feeders on livestock sold to packers for slaughter last week was $47.90 a head, compared with a loss of $185.87 the previous week.

Last week’s negative cattle margin also improved by $65.13 to $47.90, a change of about 57.6% from a negative margin of $113.03 a month earlier and by $142.41, or 74.8%, from a $190.31 loss in the same week a year ago.

To get the better feedlot margins, the Profit Tracker used the USDA’s five-area direct fed cattle price of $134.06 per cwt, which was up $0.97, or 0.07%, from $133.97 the previous week.  Last week’s price, however, was down $4.98, or 3.58%, from $139.04 a month earlier and down $26.53, or 16.5%, from $160.59 a year ago.

Lower estimated feed costs helped feedlot margins last week, the Profit Tracker showed.  For last week’s calculated average feedlot loss, a feed cost of $295.30 was used, down $8.83, or 2.90%, from $304.13 a week earlier.  A month ago, average feed costs were put at $306.38 a head, and a year ago, the cost was figured at $309.37.

Besides last week’s higher fed cattle price and lower feed costs, feedlots benefitted from lower feeder cattle prices for the fed cattle sold last week.  The Profit Tracker used an Oklahoma City price of $177.53 per cwt for 750- to 800-pound feeder cattle, down $15.85, or 8.20%, from $193.38 a week earlier.

Feeder cattle costs for fed cattle sold a month earlier were placed at $192.24 per cwt, and at $236.17 for those sold a year ago.




Things are looking somewhat better for feedlots.  It’s too early to say feedlots will be making money instead of losing it any time soon, the potential is there if fed cattle prices will play along.

The Profit Tracker used a feeder cattle cost of $155.57 per cwt and a feed cost of $307.43 a head to come up with a total cost of $1,633.78 a head and a necessary breakeven price of $125.06 per cwt from the packer.

However, calves weighing 750 to 800 pounds will finish in September or October, and the Oct futures settlement price Tuesday was $115.15 per cwt, $9.91 short of breaking even.




Things got better for beef packers last week as well.  The Sterling Profit Tracker showed positive packer margins of $81.40 a head on the cattle purchased last week, up $54.91, or 207.3%, from a positive $26.49 the previous week.

However, last week’s packer margin was down $13.53, or 14.3%, from $94.93 a month earlier.  Still, it was up $52.57, or 182.3%, from $28.83 in the same week a year ago.




Cash cattle markets Tuesday remained quiet with scattered packer bids of $209 to $210 per cwt on a dressed basis.  Asking prices were undefined.

Cattle last week traded at mostly $135 per cwt on a live basis, up $1, and at $214 to $216 dressed, unchanged.

The USDA’s choice cutout price Tuesday was down $2.20 per cwt at $222.68, and select was off $2.04 at $213.94.  The choice/select spread narrowed to $8.74 from $8.90 as 120 loads of fabricated product were sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $154.54, down $0.97.  This compares with the Apr CME settlement Tuesday of $150.17, down $0.40.