Profit Tracker: Feedyard Margins Rapidly Declining

Cattle feeding margins shed another $26 per head last week as cash prices declined $3 per cwt. ( Wyatt Bechtel )

Cattle feeding margins shed another $26 per head last week as cash prices declined $3 per cwt. Industry average profit margins on cattle sold last week were $91 per head, which is 50% lower than two weeks ago, according to the Sterling Beef Profit Tracker.

For the week ending May 10, cash cattle sold for an average of $120.24 per cwt., while the beef cutout closed the week at $221.13 down $6.88 from May 3. Packers saw profits of $149.56 per head last week, $19 lower than the previous week. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning an average of $20 per head. Feeder cattle represent 72% of the cost of finishing a steer compared with 72% a year ago.

Farrow-to-finish pork producers saw their margins decline $2 per head with profits of $47. Lean carcass prices traded at $82.73 per cwt., $0.26 per cwt. lower than the previous week, and $4.86 higher than a month ago. A year ago pork producer margins were positive $9 per head. Pork packer margins averaged a loss of $3 per head last week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $144 per cow. That would be modestly 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 $77 per head in 2019, which would be $53 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $156 per head in 2019, about $14 less than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average loss of $14.60 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $21 per head in 2019, about $3 less than the $20 per head profits of 2018.

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Feedyard Margins Decline 35%

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