April 20, 2011
 

US cattle feeding profits decline

Due to the decrease in cash fed cattle prices from US$4 to US$5 per hundredweight, US cattle feeding profits declined more than US$27 per head last week.

Packer margins declined nearly US$20 per head, falling into negative territory for the first time in a month. Cash fed cattle traded at US$119 to US$119.50 last week after setting new record highs at US$123 to US$124 the previous week. The Sterling Profit Quotient decreased 88 points for the week, according to estimates developed by Sterling Marketing Inc., Vale, Ore.

"Estimates for feedlot feed costs, breakeven prices, and margins are generated based on the cost of a 775-pound feeder steer, and corn prices (Western Kansas) during the week the cattle were placed on feed," says John Nalivka, Sterling Marketing president.

"The days on feed for those animals and closeout week are then calculated using average data that might be expected for feeding performance, it is feed conversion and ADG. Breakevens and margins will vary according to differences in the cost of cattle, cost of feed, and feeding performance," Nalivka said.

The Sterling Beef Profit Tracker is calculated using actual weekly prices for Choice fed steers, feeder steers, feed costs, boxed beef-cutout prices, hide and offal values, and other factors that influence profit margins.

The Sterling Beef Profit Tracker for the week ending April 16 is average feedyard margins are at US$231.51 per head, average packer margins are at US$15.77 per head and Sterling Profit Quotient is 694.1.