Packer, Feeder Margins Erode

July 17, 2018 03:12 PM
Cash cattle prices declined $2 per cwt. last week while the beef cutout dipped $3 per cwt., contributing to lower industry margins.

Both packer and feedyard margins declined last week, though packers remain in handsome profit territory. Feeders not so much. Feedyard closeouts revealed average losses of $43 per head, according to the Sterling Beef Profit Tracker. The previous week’s average was a profit of $8 per head. Packers saw average profits of $187 per head.

Cash prices for fed cattle declined $2 per cwt., and the beef cutout declined $3 per cwt., closing at $204.86. The cost of finishing a steer last week was calculated at $1,582, which is $193 higher than the $1,389 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning $279 per head. Feeder cattle represent 73% of the cost of finishing a steer compared with 71% a year ago.

Farrow-to-finish pork producers saw their margins decline $4 to $32 per head. Lean carcass prices traded at $78.02 per cwt., a $2.10 per cwt. gain from the previous week. A year ago pork producers earned an average of $65 per head. Pork packer margins averaged a profit of $4 per head last week.

Cash prices for fed cattle are $9 per cwt. lower than the same week a year ago. Lean hog prices are about $11 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $128 per cow. That would be $30 per head less than the estimated average profit of $158 for 2017. Estimated average cow-calf margins were $173 in 2016, and $438 per cow in 2015.

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