Profit Tracker: Modest Margins

July 15, 2016 06:00 PM

Cattle feeders continue to find modest positive margins on cattle marketed, despite a significant year-over-year decline in cash fed cattle prices. Last week feedyards found average profits of $32 per head, according to the Sterling Profit Tracker, an $18 per head decline from the previous week.

Margins remained positive despite a $2.50 per cwt. decline in fed cattle prices. USDA’s 5-area cash price last week was $120.09, and the cost of finishing cattle last week was $1,638, compared to $1,654 the previous week and $2,110 last year, according to Sterling Marketing, Inc., Vale, Ore.

Beef packer margins decreased $32 per head, resulting in average profits of $116 on every animal processed. Packer margins are about $30 per head lower than a month ago.

A month ago cattle feeders were earning $32 per head, while a year ago losses were calculated at $11 per head, according to Sterling Marketing. Feeder cattle represent 72% of the cost of finishing a steer, compared to 77% last year.

A month ago beef packers were earning $143 for every animal processed, while a year ago packers were earning $35, Sterling Marketing estimates.

Farrow-to-finish pork producers earned $40 per hog last week, about $3 per head less than the week before, and $3 per head better than a month ago.

Pork packers saw their margins improve to $9 per head compared to $4 profits the week before. Negotiated prices for lean hogs were $80 per cwt. last week, a decrease of $2 per cwt. from the previous week. Cash prices for fed cattle are $31 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $173 per cow this year. Last year’s estimated average cow-calf margins were $432 per cow. 

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