Profit Tracker: Margins See Modest Gains

12:00PM Nov 20, 2019
Gottsch Feedlots GoPro 01
Feedyard closeouts improved modestly last week with a $1 increase in cash fed cattle prices.
( FJ )

Cash cattle markets added another $1 to the fed cattle trade last week, and closeouts were $30 per head better, with average profits of $59 for the week ending Nov. 15. Feed costs calculated against last week’s closeouts, however, were $24 per head higher than the same week a year ago.

Packers may have paid more for cattle, but their profits went up anyway. That’s due to a nearly $4 per cwt. gain to wholesale beef cutout prices. Gross packer margins last week were $397 per head, according to the Sterling Beef Profit Tracker. The packer/feeder margin spread was $338, about $19 less than the previous week.

A year ago cattle feeders found profits of $22 per head on closeouts the second week in November, while packers saw profits of $227, for a spread of $205.

(Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Feeder cattle represent 73% of the cost of finishing a steer compared to 73% a year ago.

The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins decline $8 per head, putting losses at $43 per head. Lean carcass prices traded at $44.24 per cwt., $3.30 per cwt. lower than the previous week. A year ago pork producers were losing $13 per head. Pork packers saw average profits of $82 per head, an increase of $22 per head from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins cow-calf producers in 2019 will average $114 per cow. That would be 30% lower compared to the $162 estimated average profit for 2018. Estimated average cow-calf margins were $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $36 per head in 2019, which would be $12 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $215 per head in 2019, about $46 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $6 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $20 per head in 2019, about even with profits from last year.

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