Feeding Losses Continue, Packers Remain Flush

Feedyard margins improved modestly last week - though still in the red - the result of lower feeder cattle prices calculated against closeouts. ( Wyatt Bechtel )

For the fifth consecutive week, cash cattle prices held steady at $11 per cwt., resulting in $68 per head losses for cattle feeders. Those losses were about $15 per head better than the previous week, due a $2 per cwt. decline in the cost of feeder cattle calculated against those closeouts. Packer margins declined $14, but their profits remained strong at $156 per head, according to the Sterling Beef Profit Tracker.

The beef cutout declined $1.47 per cwt., closing at $200.87. The cost of finishing a steer last week was calculated at $1,590, which is $28 higher than the $1,562 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were losing $38 per head. Feeder cattle represent 73% of the cost of finishing a steer compared with 74% a year ago.

Farrow-to-finish pork producers saw their margins improve modestly from $4 per head two weeks ago to $5 per head last week. Lean carcass prices traded at $65.09 per cwt., $0.33 per cwt. lower than the previous week, and $14.98 higher than a month ago. A year ago pork producers lost an average of $4 per head. Pork packer margins averaged a profit of $20 per head last week.

Cash prices for fed cattle are steady with the same week last year. Lean hog prices are about $7 per cwt. higher than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $156 per cow. That would be $2 per head less than the estimated average profit of $158 for 2017. Estimated average cow-calf margins were $173 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $26 per head in 2018, which would be $155 less than the average of $181 per head in 2017. Nalivka expects packer margins to average about $140 per head in 2018, up from $120 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average a loss of $5 per head in 2018, compared to profits of $21 in 2017. Pork packers are projected to earn $17 per head in 2018, down from $25 profit per head in 2017.