Feedlot Margins Improve, Remain Red

Estimated cattle feeding margins for cattle sold to packers rose a bit last week but still remained significantly negative, according to the Sterling Profit Tracker from Sterling Marketing Inc., and published by AgWeb.

Calculated unhedged feedlot margins for last week’s fed cattle sales was a minus $42.16 per head, up from a minus $57.12 the previous week.

But the significant differences come when comparing last week’s margin with a month ago and a year ago.  Feedlot margins a month earlier were estimated at a positive $107.33 a head, making for a difference of $149.49 a head.  A year ago, feedlots made a calculated profit of $485.91 a head for a difference of $528.07 a head.




To arrive at the calculated margin for cattle feeders last week, John Nalivka, owner of Sterling Marketing, used the USDA’s five-area direct price of $110.32 per cwt on a live basis.  This was up from $109.30 the previous week but below the month-earlier quote of $124.82 and the year-earlier value of $136.14.

The feeder cattle cost for those cattle sold to packers last week was the Oklahoma City auction price for 750- to 800-pound feeder steers of $149.87 per cwt.  This was the same as a week earlier but down from a month ago’s $156.85 and a year ago’s $132.00.

The estimated feed cost per head for last week’s feedlot sales was $276.14, compared with $276.97 for cattle sold the previous week and $271.18 for cattle sold a month earlier and $253.87 for cattle sold a year earlier.

That left a necessary breakeven sale price of $113.36 per cwt last week, $113.42 a week ago, $117.07 a month ago and $101.06 a year ago.




For 750- to 800-pound feeder cattle purchased at the Oklahoma City auction and placed on feed last week, feeders will need to get $107.29 per cwt to break even, the Profit Tracker said.  This compares with $107.99 for those placed the previous week, $113.41 for those placed a month earlier and $113.16 for calves placed in that week last year.

To get there, the Profit Tracker used a steer cost of $136.82 per cwt, the same as a week earlier but below a month-earlier’s cost of $147.49 and a year earlier’s $149.65.

Feed costs for cattle placed on feed last week was estimated at $296.44 per head, compared with $306.01 a week earlier, $294.62 a month earlier and $277.46 a year earlier.




Meanwhile, packer margins for fed cattle purchased last week were estimated to be very wide at $372.33 a head, up even from the previous week’s $343.16, the previous month’s $183.48 and last year’s $215.76.

To arrive at that figure, Nalivka used a Texas/Oklahoma price of $110.32 per cwt, an average beef cutout of $223.66 per cwt and a drop credit of $137.74.




Only 225 head of fed cattle sold last Wednesday on the Livestock Exchange Video Auction at $110 per cwt, versus sales four weeks previous at $122.40.

Cash cattle traded last week at $110 to $111.50 per cwt on a live basis, steady to up $1.50 from the previous week.  Dressed-basis trading was seen at $177 to $178, steady to up $1.

The USDA choice cutout Tuesday was up $0.01 per cwt at $227.58, while select was off $0.40 at $205.85.  The choice/select spread widened to $21.73 from $21.32 with 110 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Monday, was $139.03 per cwt, down $0.20.  This compares with Tuesday’s Aug settlement of $146.12, up $1.27.