Profit Tracker: Feedyard Margins Top $260

January 30, 2018 05:23 PM
Feedyard closeouts improved $55 per head last week after a $4 price rally.

A $4 per cwt. rally in fed cattle prices pushed cattle feeding profit margins to $265 per head, a $55 bump from the previous week. Packers saw their margins drop $40 per head to $53.

The increase in profits was nearly all due to the increase on price, as costs for feeder cattle placed against last week’s marketings were relatively steady, according to the Sterling Beef Profit Tracker. Feeder cattle calculated against last week’s fed cattle sales were priced at $145.50 per cwt., $0.73 per cwt. higher than previous week.

The 5-area direct cash price was $126.64, 2.86, up $3.78, while break evens were near steady at $107 per cwt. Beef packer margins declined on the higher cost of fed cattle and despite a $0.72 per cwt. increase in the beef cutout to $205.69. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

The cost of finishing a steer last week was calculated at $1,496 per head, which is $55 more than $1,441 a year ago. A month ago cattle feeders were earning $150 per head, while a year ago profits were calculated at $245 per head. Feeder cattle represent 74% of the cost of finishing a steer, compared to 76% last year.

Farrow-to-finish pork producers saw their margins decline $1.64 per head to $28. Lean carcass prices traded at $71.42, a decrease of $0.19 per cwt. from the previous week. A year ago pork producers earned an average of $16 per head. Pork packer margins totaled $15 per head last week, an increase of $31 per head.

Cash prices for fed cattle are $5 per cwt. higher than the same week a year ago. Lean hog prices are about $5 per cwt. higher than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $103 per cow. That would be $55 per head less than the estimated average profit of $158 for 2017. Estimated average cow-calf margins were $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $92 per head in 2018, which would be $144 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $73 per head in 2018, down from $118 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average $13.75 per head, compared to $20.87 in 2017. Pork packers are projected to earn $19 per head in 2018, down slightly from $25 profit per head in 2017.

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