Profit Tracker: Margins Steady To Strong

Cattle feeders, pork producers, and packers for both segments found solid profits last week, the first week of 2018. Cattle feeding margins declined $6 per head, but closeouts were $144 to the good last week, according to the Sterling Beef Profit Tracker.

The 5-area direct cash price was $121.79 per cwt., down about $1, while break evens held steady around $112. The cost of feeder cattle calculated against last week’s marketings were slightly lower, while feed costs declined $5 per head, according to the weekly average calculations.

Beef packer margins increased $33 per head to average $87. The beef cutout increased $6 per cwt. to $206.55. 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 $1,550 per head, which is $67 more than the $1,483 a year ago. A month ago cattle feeders were earning $77 per head, while a year ago profits were calculated at $155 per head. Feeder cattle represent 74% of the cost of finishing a steer, compared to 76% last year.

Farrow-to-finish pork producers saw their margins improve $11 per head to $15.59. Lean carcass prices traded at $64.17, an increase of $4.92 per cwt. from the previous week. A year ago pork producers earned an average of $1 per head. Pork packer margins totaled $23 per head last week, a decline of $7 per head.

Cash prices for fed cattle are $4 per cwt. higher than the same week a year ago. Lean hog prices are about $7 per cwt. higher than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $103 per cow. That would be $55 per head less than the estimated average profit of $158 for 2017. Estimated average cow-calf margins were $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $92 per head in 2018, which would be $144 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $73 per head in 2018, down from $118 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average $13.75 per head, compared to $20.87 in 2017. Pork packers are projected to earn $19 per head in 2018, down slightly from $25 profit per head in 2017.

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