It doesn’t happen very often, but estimated cattle feeding margins last week were above those of beef packers.
The revelation came in the Sterling Marketing Inc., Beef Profit Tracker, published by Drovers.
For the week ended Jan. 11, estimated unhedged cattle feeding margins came to $104.16 a head, compared with estimated beef packer margins at $87.05 a head. Drovers said it was the first time in more than a year that cattle feeding margins exceeded packer margins.
FEEDLOT MARGINS
Last week’s Beef Profit Tracker showed that the latest estimated feedlot margin was up $26.60, or 34.3%, from $77.56 per head a week earlier. It even was $5.38, or 5.45%, above the $98.78 of a month earlier and $36.95, or 55.0%, above the $67.21 of a year earlier.
To arrive at the estimated feedlot margin, John Nalivka, president of Sterling Marketing Inc., used the USDA’s five-area direct weekly average sales price for fed cattle of $123.83 per cwt. This was up $0.89, or 0.72%, from $122.94 a week earlier, and $5.53, or 4.67%, above the $118.30 of a month earlier. It also was $3.86, or 3.22%, above the year-earlier price of $119.97.
Nalivka also used an average feeder cattle cost of $148.43 per cwt for the cattle sold as fed cattle to packers last week. This was for 750- to 800-pound feeder cattle at the Oklahoma City, OK, auction.
The feeder cattle cost for cattle marketed to packers last week was down $2.02, or 1.34%, from $150.45 per cwt used a week earlier and down $1.09, or 0.73%, from $149.52 a month earlier. However, it was up $0.45, or 0.30%, from $147.98 a year earlier.
Feed cost for cattle sold to packers last week was estimated at an average of $282.96 a head, up $1.70, or 0.60%, from $281.26 a week earlier and up $11.17, or 4.11%, from $271.79 a month earlier. It even was $8.22, or 2.99%, above last year’s $274.74.
All that came to an estimated total cost of $1,592.92 a head for those cattle sold to packers last week, the Profit Tracker said. This was down $14.51, or 0.90%, from $1,607.43 for cattle sold a week earlier and only $2.58, or 0.16%, above the $1,590.34 of a month ago. The new estimated total cost was up $15.54, or 0.99%, from $1,577.38 a year earlier.
PACKER MARGINS
Estimated packer margins for cattle purchased last week came to $87.04 a head, the Profit Tracker said. This was down $19.98, or 18.7%, from $107.02 a week earlier and $50.46, or 36.7%, below the $137.50 of a month earlier. It also was down $14.21, or 14.0%, from $101.25 a year earlier.
Nalivka used the same USDA five-area price for fed cattle for his calculations. He also used an average beef cutout price of $212.76 per cwt, compared with $214.81 a week earlier, $211.38 a month earlier and $208.45 a year earlier.
He added in a drop credit of $135.48 a head, versus $133.53 a week earlier, $134.37 a month earlier and $158.65 a year earlier.
CATTLE, BEEF RECAP
Cash cattle traded last week at $123 to mostly $124 per cwt on a live basis, up $1 from the previous week and at $195 to mostly $197 on a dressed basis, up $1 to $2.
The USDA choice cutout Wednesday was down $0.28 per cwt at $211.93, while select was up $1.07 at $206.94. The choice/select spread narrowed to $4.99 from $6.34 with 100 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $144.19 per cwt, down $0.25. This compares with Wednesday’s Jan settlement of $143.77, down $0.97.