Profit Tracker: Still in the Black

01:22AM Dec 13, 2016
( Wyatt Bechtel )

Normally when profit margins decline $50-plus per head there’s no rejoicing. But given the bloodbath feedyards have survived the past two years closeouts written in black ink are always welcome.

Despite a $4 per cwt decline in the 5-area average price for cash fed cattle, feedyards managed $39 per head profits, though that average was $53 short of the previous week’s profit of $92, according to the Sterling Beef Profit Tracker. The 5-area direct price was $110.06 per cwt.

The total cost of finishing a steer last week was $1,493 compared to $1,497 the previous week and $2,203 last year. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.

Beef packer margins decreased $8 per head to $82. Packers earned an average of $168 per head a month ago and $67 per head during the same period a year ago.

A month ago cattle feeders were losing $117 per head, while a year ago losses were calculated at $554 per head. Feeder cattle represent 75% of the cost of finishing a steer, compared to 79% last year.

Farrow-to-finish pork producers lost $8 per hog last week, about $16 less than the week before. A month ago farrow-to-finish pork producers lost about $35 per head.

Pork packers saw their margins decline $10 per head to $36. Negotiated prices for lean hogs were $43.54 per cwt. last week, about $6 per cwt. higher. Lean hog prices have increased about $10 per cwt. the past two weeks. Cash prices for fed cattle are $8 per cwt. lower than last year and prices for lean hogs are about even with last year.

Sterling Marketing president John Nalivka projects average cash profit margins for cow-calf producers at $144 per cow this year. In 2017, Nalivka projects cow-calf losses of $24. Last year’s estimated average cow-calf margins were $432 per cow.