Feeding, Packer Margins Exceed Triple Digits

Both feeding and packing profit margins exceeded $100 per head last week with a $1 rally in the cash fed cattle trade. ( Wyatt Bechtel )

Profit margins for both cattle feeders and beef packers improved last week, with both trending over $100 per head. Feedyard closeouts rose $7 per head to $102, while packer margins rose $6 per head to $112, according to the Sterling Beef Profit Tracker.

For the week ending Feb. 1, cash cattle sold for an average of $124 per cwt., while the beef cutout closed the week at $216. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning an average of $202 per head. Feeder cattle represent 71% of the cost of finishing a steer compared with 72% a year ago.

Farrow-to-finish pork producers saw their margins decline $5 per head, with losses at $11. Lean carcass prices traded at $52.84 per cwt., $1.21 per cwt. lower than the previous week, and $3.90 better than a month ago. A year ago pork producer margins were a positive $32 per head. Pork packer margins averaged a profit of $22 per head last week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $162 per cow. That would be steady compared to the $164 estimated average profit for 2017. Estimated average cow-calf margins were $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $41 per head in 2019, which would be $17 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $159 per head in 2019, about $10 less than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average loss of $2 pere head in 2019, as compared with an average profit of $1 per head in 2018. Pork packers are projected to earn $22 per head in 2019, about $2 more than the $20 per head profits of 2018.

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