Packer Profits Near $300 Per Head

September 4, 2018 03:34 PM
Beef packer profits totaled a collective $186 million last week, according to the Sterling Beef Profit Tracker.

Beef packer margins climbed another $27 to a per head total of $296 last week, according to the Sterling Beef Profit Tracker. Multiplied by the 635,000 cattle processed last week suggests packers earned $186 million, while feedyards saw their margins improve from a $15 the previous week to $23 per head profits. Cash cattle prices declined $2 per cwt. to an average of $107.

The beef cutout declined $1.58 per cwt., closing at $210.57. The cost of finishing a steer last week was calculated at $1,470, which is $13 higher than the $1,457 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning $2 per head. Feeder cattle represent 74% of the cost of finishing a steer compared with 74% a year ago.

Farrow-to-finish pork producers saw their margins fall another $5 per head to a negative $53 per head. Lean carcass prices traded at $38.79 per cwt., $2.05 per cwt. lower than the previous week, and $21.64 lower than a month ago. A year ago pork producers earned an average of $15 per head. Pork packer margins averaged a profit of $46 per head last week.

Cash prices for fed cattle are $6 per cwt. higher than the same week last year. Lean hog prices are about $27 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $132 per cow. That would be $26 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.

For feedyards, Nalivka projects an average profit of $58 per head in 2018, which would be $166 less than the average of $224 per head in 2017. Nalivka expects packer margins to average about $145 per head in 2018, up from $120 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average $1 per head in 2018, compared to profits of $21 in 2017. Pork packers are projected to earn $17 per head in 2018, down from $25 profit per head in 2017.

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