Profit Tracker: Packer Margins Decline 34%

12:54PM Apr 07, 2020
Cattle prices declined $8 per cwt.
( UNL )

Beef packer margins declined $191 per head last week, a 34% drop that still left packers making roughly $370 per head. Cattle feeders saw closeouts shift from $25 per head profits the previous week to $80 per head losses the week ending April 3, 2020, according to the Sterling Beef Profit Tracker.

Last week’s markets saw cash cattle prices decline about $8 per cwt. for an average price of $110.83. Meanwhile, the choice beef cutout price dropped nearly $17 per cwt. to an average of $236.90.

(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Here are the calculations.)

Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices.     

The packer/feeder cash margin spread for the week ending April 3 was $450 per head in favor of packers.

A year ago cattle feeders found cash profits of $69 per head on closeouts the last week in March, while packers saw profits of $146. (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 71% 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 $17, with $14 per head losses compared to $3 per head profits the previous week. Lean carcass prices traded at $52.40 per cwt., $8.58 per cwt. lower than the previous week. A year ago pork producers earned $40 per head. Pork packers saw average profits of $14 per head, down $16 per head from the previous week.

(Editor’s note: Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

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