Packer, Feeder Margins Erode

Cash cattle prices declined $2 per cwt. last week while the beef cutout dipped $3 per cwt. ( Wyatt Bechtel )

Both packer and feedyard margins declined last week, though packers remain in handsome profit territory. Feeders not so much. Feedyard closeouts revealed average losses of $43 per head, according to the Sterling Beef Profit Tracker. The previous week’s average was a profit of $8 per head. Packers saw average profits of $187 per head.

Cash prices for fed cattle declined $2 per cwt., and the beef cutout declined $3 per cwt., closing at $204.86. The cost of finishing a steer last week was calculated at $1,582, which is $193 higher than the $1,389 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning $279 per head. Feeder cattle represent 73% of the cost of finishing a steer compared with 71% a year ago.

Farrow-to-finish pork producers saw their margins decline $4 to $32 per head. Lean carcass prices traded at $78.02 per cwt., a $2.10 per cwt. gain from the previous week. A year ago pork producers earned an average of $65 per head. Pork packer margins averaged a profit of $4 per head last week.

Cash prices for fed cattle are $9 per cwt. lower than the same week a year ago. Lean hog prices are about $11 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.

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