Estimated feedlot margins for unhedged fed cattle sold to packers, or marketed, last week rose about $18 a head from the previous week, despite rising costs, according to the Sterling Beef Profit Tracker from Sterling Marketing Inc., and published by the Farm Journal’s Ag Web.
The estimated packer margin for cattle purchased last week was up from a week earlier, down from a month earlier but up sharply from a year earlier.
THE FEEDLOT BREAKDOWN
The Beef Profit Tracker’s estimated feedlot profit for cattle marketed last week came to $8.11 a head. This was up from a $10.13-per-head loss a week earlier but was down from an $88.04 profit a month earlier and from an $83.84 profit a year ago.
To arrive at last week’s estimated profit margin, John Nalivka, owner of Sterling Marketing, used a USDA five-area direct fed cattle average price of $108.89 per cwt. This was up $3.32, or 3.14%, from $105.57 a week earlier but down $1.03, or 0.94%, from $109.92 a month earlier. It also was down $13.52, or 11.0%, from $122.41 a year earlier.
The average feeder steer price used for the fed cattle marketed by feedlots last week was the Oklahoma City price of $138.87 per cwt for 750- to 800-pounders. This was up from $135.11 used last week and up from $131.19 a month ago but down from $143.54 a year ago.
The estimated feed cost to get those cattle to market came to $261.24 a head, down $3.11, or 1.18%, from $264.35 a week earlier but up $4.49, or 1.75%, from $256.75 a month earlier. It also was $59.57, or 18.6%, less than the $320.81 feed cost for cattle marketed in the same week a year ago.
That brought the estimated breakeven cost, not counting fixed costs, for the fed cattle marketed last week to $108.29 per cwt. This was up $1.98, or 1.86%, from $106.31 a week earlier and up $4.84, or 4.68%, from the $103.45 of a month earlier but was down $7.96, or 6.85%, from $116.25 a year earlier.
PACKER MARGINS RISE
The packer margin for cattle purchased last week came to a positive $273.40 a head, up $1.93, or 0.71%, from $271.47 a week earlier but down $2.40.16, or 46.8%, from $513.56 a month earlier. Last week’s estimated margin also was up $197.66, or 261.0%, from a positive $75.74 a head a year earlier.
The beef cutout last week averaged $208.09 per cwt, up from $206.51 a week earlier but down from $109.92 a month earlier and down from $122.41 a year earlier.
The drop credit averaged $138.16 a head, compared with $137.19 a week earlier, $130.15 a month earlier and $133.90 a year earlier.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains this week at $111 to $112 per cwt up $1 to $2 from last week. Dressed-basis trading was reported at $176 per cwt, up $4.
The USDA choice cutout Wednesday was up $0.23 per cwt at $210.53, while select was up $4.38 at $199.86. The choice/select spread narrowed to $10.67 from $14.82 with 102 loads of fabricated product and 39 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.21 a bushel over the Mar CBOT futures contract, which settled at $4.74 1/2 a bushel, up $0.08 1/2.
No cattle contracts were tendered for delivery against the Dec contract Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $138.71 per cwt, up $0.31. This compares with Wednesday’s Jan contract settlement of $138.52 per cwt, down $1.10.