Profit Tracker: Packer Margins Top $300

June 27, 2017 03:25 PM
GoPro Feedlot Cattle

Profit margins shifted dramatically from feeders to packers last week after an $8 per cwt. decline in cash fed cattle prices. Feedyard margins dropped $155 per head to $285, which helped boost packer margins $51 per head, according to the Sterling Beef Profit Tracker.

Cattle prices have plunged $15 per cwt over the past two weeks, yet the beef cutout price has declined just $5 per cwt., with the balance boosting processing margins. Feedyards, however, were profitable for the 30th consecutive week, according to Sterling Marketing’s weekly analysis. The beef cutout closed the week at $240 per cwt.

The cost of finishing a steer last week was calculated at $1,403 per head, which is $172 less than the $1,575 a year ago. A month ago cattle feeders were earning $498 per head, while a year ago profits were calculated at $54 per head. Feeder cattle represent 73% of the cost of finishing a steer, compared to 74% last year.

Farrow-to-finish pork producers earned $61 profit per hog last week, a $9 per head increase from the previous week. A month ago farrow-to-finish pork producers showed a profit of $28 per head.

Pork packers saw their margins steady at $18 per head. Negotiated prices for lean hogs were $88.97 per cwt last week, $5 per cwt higher. Cash prices for fed cattle are $4 per cwt. higher than last year and prices for lean hogs are about $5 per cwt. higher.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $111 per cow. That would be $66 per head less than the estimated average profit of $177 for 2016. Estimated average cow-calf margins were $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $260 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $105 per head in 2017, down from $114 in 2016.

For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $19 per head, compared to $5 per head last year. Pork packers are projected to earn $22 per head in 2017, down slightly from $24 profit per head in 2016.

For more beef coverage, visit Drovers.

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