Huge swings seen in US feedlot profitability

Jon Condon, 07/04/2014


In case anybody thinks feedlot profitability in Australia is volatile, have a look at these figures out of the US industry for a minute.

For the past month, US cattle feeding margins have averaged more than US$240 (A$260) per head, according to the Sterling Beef Profit Tracker. For the week ending March 29, feeder margins averaged US$242, compared to US$247 the previous week and US$284 on month ago.

But at this time last year, US feeders were losing $105 per head. That’s a breathtaking US$347 turnaround in profitability – per beast, in 12 months. While we sometimes think that profit/loss on Beef Central’s Australian 100-day grainfed trading budget is volatile, we can’t go close to matching that sort of performance.

Fed steer prices in the US last week climbed US$1.15 per hundredweight to $153 (that’s about A300c/kg). For the past month, US fed prices have been more than US$150 per hundredweight. Feeder steers averaged US$175.17, an increase of $2.31 per hundredweight compared to the previous week. Feed costs stayed the same at US$340.67 while total costs were up $18.64 per head to US$1825 (A$1983).

By comparison, total production cost in our latest Australian budget (feeder steer price plus feeding cost) calculated on Friday was A$1530 (click here for today's grainfed trading budsget story).

US packer margins fell again last week but remain in positive territory at US$36.83/beast, compared to US$65.94 per head the previous week. But US packers were losing US$80.05 and $39.37 per head at this time last month and last year, respectively.

The US beef cut-out value dropped nearly $3 last week to $238.01 per hundredweight. At this time last year, the cut-out value was $189.63.







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