Profit Tracker: Feeding, Packing Margins Gain

Both feedyards and beef packers saw their margins increase last week as cash cattle prices and the beef cutout held relatively steady. Last week’s average feeding margin was $35 per head, up $20 per head from the previous week, and $105 less than just one month ago. Still, positive margins through Saturday represented the 43nd consecutive week feedyard closeouts were in the black, according to the Sterling Beef Profit Tracker. Packer margins climbed $26 per head to $194.

Cash fed cattle averaged $105, even with the week before, and the beef cutout price was steady at $192.04 per cwt., but now $5 lower than a month ago. Break even prices for steers sold last week averaged $102.50 per cwt., $1 higher than the previous week. However, cattle placed on feed last week have a projected breakeven of $109.81 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

The cost of finishing a steer last week was calculated at $1,427 per head, which is $172 less than the $1,599 a year ago. A month ago cattle feeders were earning $140 per head, while a year ago losses were calculated at $72 per head. Feeder cattle represent 73% of the cost of finishing a steer, compared to 75% last year.

Farrow-to-finish pork producers earned $8 profit per hog last week, a $7 per head decrease from the previous week. A month ago farrow-to-finish pork producers showed a profit of $51 per head.

Pork packers saw their margins increase $3 per cwt. to $34 per head. Negotiated prices for lean hogs were $62.87 per cwt., a $2.72 decline. Cash prices for fed cattle are $4 lower than last year, and prices for lean hogs are about $2 per cwt. higher.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $126 per cow. That would be $51 per head less than the estimated average profit of $177 for 2016. Estimated average cow-calf margins were $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $186 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $146 per head in 2017, up from $114 in 2016.

For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $25 per head, compared to $5 per head last year. Pork packers are projected to earn $23 per head in 2017, down slightly from $24 profit per head in 2016.