Profit Tracker: Packer Margins In Decline

Feedyard margins declined last week. ( CAB )

Beef packer margins have declined $130 per head (35%) over the past month, including a $40 per head decline last week. Yet, packer margins remain at $255 per head, according to the Sterling Beef Profit Tracker.

Cattle feeders saw their closeouts post average profits of $81 per head last week, roughly $27 per head lower than the previous week. The packer/feeder margins spread declined $11 last week to $174.

A year ago cattle feeders found profits of $99 per head on closeouts the first week in December, while packers saw profits of $159, for a spread of $60.

(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.

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

Farrow-to-finish pork producers saw their margins improve $11 per head, putting losses at $30 per head. Lean carcass prices traded at $47.24 per cwt., $2.93 per cwt. better than the previous week. A year ago pork producers were losing $20 per head. Pork packers saw average profits of $64 per head, a decrease of $7 per head from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins cow-calf producers in 2019 will average $134 per cow. That would be 17% 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 $104 per head in 2019, which would be $80 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $238 per head in 2019, about $18 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $3 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $46 per head in 2019, about double last year’s profits.

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Profit Tracker: Feedyard Profits Rise To Triple Digits