Profit Tracker: Feedyard, Packer Margins Slip Lower

Feedyard closeouts were modestly profitable. ( FJ )

Gains in cash cattle prices did not translate into higher profits for feedyards last week. Cattle traded at $116, about $1 higher, but feedyard margins declined $35 per head to a modest average profit of $24, according to the Sterling Beef Profit Tracker. The decline was due to higher feeder cattle prices calculated against last week’s closeouts.

Packer margins also slipped modestly, but packer profits still totaled an average of $363 per head. The packer/feeder margins spread was $339, about $1 higher than the previous week.

A year ago cattle feeders found profits of $39 per head on closeouts the third week in November, while packers saw profits of $224, for a spread of $185.

(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 73% 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 $1 per head, putting losses at $43 per head. Lean carcass prices traded at $44.06 per cwt., $0.18 per cwt. lower than the previous week. A year ago pork producers were losing $13 per head. Pork packers saw average profits of $78 per head, an decrease of $5 per head from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins cow-calf producers in 2019 will average $114 per cow. That would be 30% lower compared to the $162 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 $36 per head in 2019, which would be $12 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $215 per head in 2019, about $46 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $6 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $20 per head in 2019, about even with profits from last year.

Related stories:

Fed Cattle $1 Higher Ahead Of Neutral COF

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