Feeding Margins Improve With $2 Rally

Cattle feeding margins moved into the black last week with higher cash bids. ( Wyatt Bechtel )

Cattle feeding margins improved $70 per head last week as cash cattle prices gained $2 per cwt. The higher cash bids left closeouts showing an average $29 per head profit. Packer margins were $3 per head lower at $165, according to the Sterling Beef Profit Tracker.

The beef cutout was relatively unchanged, closing at $203.14. The cost of finishing a steer last week was calculated at $1,552, which is $186 higher than the $1,366 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning $261 per head. Feeder cattle represent 73% of the cost of finishing a steer compared with 73% a year ago.

Farrow-to-finish pork producers saw their margins slip to a negative $3 per head, $17 less than the previous week. Lean carcass prices traded at $60.43 per cwt., $7 per cwt. lower than the previous week. A year ago pork producers earned an average of $53 per head. Pork packer margins averaged a profit of $18 per head last week.

Cash prices for fed cattle are $4 per cwt. lower than the same week a year ago. Lean hog prices are about $22 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $128 per cow. That would be $30 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 $51 per head in 2018, which would be $185 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $147 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 $1.72 per head, compared to profits of $21 in 2017. Pork packers are projected to earn $13 per head in 2018, down from $25 profit per head in 2017.