Profit Tracker: Packers In The Black, Feedyard Margins Ugly

Profit Tracker: Packers In The Black, Feedyard Margins Ugly

Beef packers put away the red ink last week as they turned modest profits on every animal processed. Feedyard margins, however, slipped a little further away from positive.

Despite a near $3 per cwt. gain in cash cattle prices last week, feedyard losses increased about $3 per head, leaving average per head losses at more than $153. Last week’s 5-area direct cash price for fed steers was $161.34, well below the average breakeven price of $173.13, according to the Sterling Beef Profit Tracker. A year ago cattle feeders were earning $233 on every animal sold.

Beef cutout prices trended more than $3 per cwt. higher to $248.33, helping packer margins improve more than $20 per head, resulting in profits of $3.94 on every animal processed.

Farrow-to-finish pork margins slipped nearly $8 per head, producing losses of nearly $1 per head. Both beef and pork profit margins are calculated by Sterling Marketing, Vale, Ore.

The cost of feeder cattle factored against last week’s live cattle sales was up about t$5 per head compared to the previous week. Feeder cattle represent more than 81% of the total cost for finishing a steer, up significantly from last year when feeder cattle represented 73% of that total cost.

A month ago beef packers were losing $7 on every animal processed, while a year ago packers were losing $55, Sterling Marketing estimates. Pork packers saw their margins slip $2 per head, with losses now at $6 per head. Cash prices for fed cattle are $12 per cwt. higher than last year, and negotiated hog prices are $47 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $579 per cow this year. Last year’s estimated average cow-calf margins were $548 per cow. 

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