Packer/Feeder Margin Spread Now Exceeds $600 Per Head

Feedyard losses exceeded $200 per head last week. ( FJ )

Losses continued to grow for feedyards and the spread between feeder losses and packer profits only widened with a $1.50 per cwt. decline in cash cattle prices last week.

Packers bought the few cattle they needed at an average of $100.70 per cwt., leaving feedyard margins at a negative $203 per head. Packer margins held mostly steady at a historic $415 per head, leaving the spread between feeder losses and packer profits at $618, according to the Sterling Beef Profit Tracker.  

The same week a year ago Sterling estimated feedyard profits of $38 per head while packer profits were $205, leaving a spread of $167 per head between the two.

(Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Feeder cattle represent 73% of the cost of finishing a steer compared to 71% a year ago.

The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins decline $13 per head with average losses of $21. Lean carcass prices traded at $49.73 per cwt., $6.98 per cwt. lower than the previous week. A year ago pork producer margins were negative $30 per head. Pork packers saw average profits of $35 per head, $10 more than the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $138 per cow. That would be 14% lower compared to the $161 estimated average profit for 2018. Estimated average cow-calf margins were $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $54 per head in 2019, which would be $30 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $174 per head in 2019, about $5 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $11 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $12 per head in 2019, about $8 less than the $20 per head profits of 2018.

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