Profit Tracker: Margins Retreat for Packers, Producers

January 17, 2017 05:44 PM
Feedlot Cattle

First the good news: cattle feeding profits remained in triple digits last week at $118 per head. The bad news is that’s $37 per head less than profits the week before. Last week also marks the eighth consecutive week with positive closeouts, according to the Sterling Beef Profit Tracker.

Packers had their worst profit week in months, with margins declining $83 per head to $49. Much of that decline was due to a $9 per cwt drop in the beef cutout, which ended the week of Jan. 13 at $191.42.

Direct cattle traded at $118.94, nearly $1 higher than the week before, though feedyards were asking $120 at week’s end. Online sales through the Fed Cattle Auction on Wednesday saw packers pay $120, but they quickly pulled bids back and a standoff ensued.

The total cost of finishing a steer last week was $1,537, compared with $1,484, compared with $1,481 the previous week, and $2,101 last year. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.

A month ago cattle feeders were earning $67 per head, while a year ago losses were calculated at $244 per head. Feeder cattle represent 76% of the cost of finishing a steer, compared to 80% last year.

Farrow-to-finish pork producers earned $10 per hog last week, about $9 more than the week before. A month ago farrow-to-finish pork producers lost about $5 per head.

Pork packers saw their margins decline $12 per head to $28. Negotiated prices for lean hogs were $62.43 per cwt. last week, about $5.70 per cwt. higher. Cash prices for fed cattle are $14 per cwt. lower than last year and prices for lean hogs are about $8 higher than last year.

Sterling Marketing president John Nalivka projects average cash profit margins for cow-calf producers at $144 per cow for 2016. In 2017, Nalivka projects cow-calf losses of $24. Estimated average cow-calf margins were $432 per cow in 2015.

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