Feedlot Margins Tighten, Packer Losses Persist

An article on Drovers

Cattle feeding margins narrowed sharply for the week of July 18. Sterling’ s estimate for the cattle marketed on the show list last week was $104.61/head.

The 5-Area Direct price averaged $238.50/cwt. against the prior week’s average of $248.01/cwt. Sterling’s estimate for last week’s breakeven was $231/cwt. while the breakeven for cattle placed on feed last week was sharply higher at $247.31/cwt., which places a great deal of confidence in market performance when those cattle are marketed at the end of the fourth quarter.

Meanwhile, packers saw some improvement in margins last week with Sterling’s estimate at -$293.83/head against -$311.11/head the previous week — if that is to be called an improvement! Consolidation of capacity continues to be the corrective action to the packer’s situation as cattle numbers will remain relatively tight going forward.

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