Profit Tracker: Margins Hold Firm

March 27, 2018 12:05 PM
Both cattle feeding and packer margins held firm at solidly profitable levels.

Margins for both cattle feeders and beef packers slipped some last week, but profits remain solid. Cattle feeders saw a $2 per cwt. decline in fed cattle prices, and a $13 per head decline in profit margins. Average closeouts reported profits of $127 per head, according to the Sterling Beef Profit Tracker.

The 5-area average Choice steer price last week was $125.49, while the price of feeder cattle calculated against the fed cattle sales were $156.43 per cwt., or $1.28 per cwt. lower. The cost of finishing a steer last week was calculated at $1,619, which is $299 higher than the $1,320 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Beef packer operating margins declined $3 per head to $156, despite a steady beef cutout to $223.07 per cwt.

A month ago cattle feeders were earning $174 per head, while a year ago profits were calculated at $492 per head. Feeder cattle represent 75% of the cost of finishing a steer compared with 71% a year ago.

Farrow-to-finish pork producers saw their margins decline $8 per head to a $1 per head loss. Lean carcass prices traded at $56.70 per cwt., a decline of $4.50 from the previous week. A year ago pork producers earned an average of $23 per head. Pork packer margins improved $5 per head to $22.

Cash prices for fed cattle are $5 per cwt. lower than the same week a year ago. Lean hog prices are about $12 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $133 per cow. That would be $25 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 $84 per head in 2018, which would be $152 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $92 per head in 2018, down from $120 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average $11.25 per head, compared to $20.87 in 2017. Pork packers are projected to earn $18 per head in 2018, down from $25 profit per head in 2017.

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