Profit Tracker: Packer Margins Went Up How Much?!

Beef packer margins increased significantly last week. ( FJ )

As expected, beef packer margins jumped wildly higher the week ending Aug. 17, while cattle feeding margins slipped into the red. According to the Sterling Beef Profit Tracker, packer margins topped $358 per head last week, or $167 higher than the previous week.

Cattle feeders saw their margins decline from an average of $24 per head profit to a $28 per head loss.

Those swings in profitability were driven by a cash fed cattle market at $5 per cwt. lower and a Choice beef cutout that was $14 per cwt. higher, both the result of market volatility following the Tyson fire incident at its Holcomb, Kan., plant.

A year ago cattle feeders were losing an average of $60 per head on cash prices of $110. Feeder cattle represent 71% 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 $8 per head with profits of $28. Lean carcass prices traded at $73.04 per cwt., $4 per cwt. lower than the previous week. A year ago pork producer margins were negative $40 per head. Pork packers saw average profits of $23 per head, $8 better than the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $138 per cow. That would be 14% 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 $62 per head in 2019, which would be $38 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $155 per head in 2019, about $11 less than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $13 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $16 per head in 2019, about $4 less than the $20 per head profits of 2018.

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