Profit Tracker: Margins Hit With Superstorm

June 16, 2015 11:56 AM
Profit Tracker: Margins Hit With Superstorm

It was a devastating week for cattle feeders. Margins dropped with a thud – another $107 per head – with total average losses now at $270 per animal.

That’s the result of a $1.77 per cwt. decline in the 5-area direct cash price which fell to $153.16 last week, well below the average  breakeven price of $173.95 per cwt., according to the Sterling  Beef Profit Tracker. A year ago cattle feeders were making $170 peer head.

Beef cutout prices traded nearly $3 per cwt. lower than the previous week at $245, after falling $9 per cwt. the week before. Packer margins finished the week at $35 for every animal processed.

Farrow-to-finish pork margins fell nearly $5 per head with profits of $26.73 per head. Negotiated lean hog carcass prices were $1.68 per cwt. lower at $80.16. Both beef and pork profit margins are calculated by Sterling Marketing, Vale, Ore.

The cost of feeder cattle factored against last week’s live cattle sales was up $2.69 per cwt. compared to the previous week. Feeder cattle represent about 79% of the total cost for finishing a steer, up significantly from last year when feeder cattle represented 73% of that total cost.

A month ago beef packers were earning $65 on every animal processed, while a year ago packers were earning $24, Sterling Marketing estimates. Pork packers saw their margins improve $2 per head, leaving them with profits of slightly more than $1 per head. Cash prices for fed cattle are $3.50 per cwt. higher than last year, and negotiated hog prices are $37 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $541 per cow this year. Last year’s estimated average cow-calf margins were $548 per cow.

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