Profit Tracker: Rally Puts Feedlot Margins In The Black

Cash cattle prices rallied $3 per cwt. last week. ( FJ )

Average feedyard close-outs were printed in black ink last week for the first time in several months after a $3 per cwt. rally in cash cattle prices. Choice steers averaged $133.36 per cwt., lifting feedyard margins to an average of $40 per head, after losses of $25 per head the previous week, according to the Sterling Beef Profit Tracker.

Beef packer margins gained $52 per head on gains of nearly $8 per cwt. in the beef cutout price to $226.28 per cwt. For the week ending Nov. 2, packer margins averaged $358 per head, leaving the packer/feeder margin spread at $318, down $10 from the previous week.

A year ago cattle feeders found profits of $68 per head on closeouts the first week in November, while packers saw profits of $223, for a spread of $155.

(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 72% of the cost of finishing a steer compared to 74% 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 $12 per head, putting losses at $28 per head. Lean carcass prices traded at $51.42 per cwt., $5.52 per cwt. lower than the previous week. A year ago pork producers were at breakeven. Pork packers saw average profits of $43per head, an increase of $12 from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins cow-calf producers in 2019 will average $124 per cow. That would be 13% 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 $33 per head in 2019, which would be $9 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $192 per head in 2019, about $23 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 $16 per head in 2019, about $4 less than the $20 per head profits of 2018.

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Cattle Rally In Progress, Feds, Feeders Higher

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