Feedlot Margins Above Water, Packer Margins Drop

A $3 rally in fed cattle prices helped boost feedyard closeouts to modest $30 per head profits. ( Wyatt Bechtel )

Average feedlot margins topped $30 per head last week, due largely to a $3 rally in fed cattle prices which climbed to $111 per cwt. Packer margins declined to $207 per head, according to the Sterling Beef Profit Tracker. This latest report contains updated and adjusted costs and performance parameters to the feeding model, Sterling said. Last week Sterling raised fabrication costs $20 per head in its packer model to account for a 12% increase in wages from 2013 to 2018.

The beef cutout declined $3.67 per cwt., closing at $203.85. The cost of finishing a steer last week was calculated at $1,493, which is $33 higher than the $1,460 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were losing $9 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 $19 per head to a negative $30 per head. Lean carcass prices traded at $50.11 per cwt., $8.63 per cwt. higher than the previous week, and $5.55 higher than a month ago. A year ago pork producers lost average of $4 per head. Pork packer margins averaged a profit of $34 per head last week.

Cash prices for fed cattle are $5 per cwt. lower than the same week last year. Lean hog prices are about $4 per cwt. lower than last year

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $146 per cow. That would be $12 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 $31 per head in 2018, which would be $150 less than the average of $181 per head in 2017. Nalivka expects packer margins to average about $159 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 $21 per head in 2018, down from $25 profit per head in 2017.

Submitted by Jim Getten on Fri, 09/21/2018 - 12:27

Producers must learn to market their own production. Specialty markets are the best way to prosperity. Get into organics, specialty crops. etc. if you can or get REALLY big and stay on the merry-go-round.