Profit Tracker: Spring Erosion Continues

A $3 - $4 decline in fed cattle prices sliced another $33 per head off average feedyard margins last week. ( . )

Cattle feeding margins shed another $33 per head last week as cash prices declined $3.76 per cwt. Industry average profit margins on cattle sold last week were $58 per head, which is 50% lower than a month ago, according to the Sterling Beef Profit Tracker.

For the week ending May 17, cash cattle sold for an average of $116.48 per cwt., while the beef cutout closed the week at $218.18, down $2.95 from May 10. Packers saw profits of $164 per head last week, $16 higher than the previous week. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were losing an average of $43 per head. Feeder cattle represent 71% of the cost of finishing a steer compared with 71% a year ago.

Farrow-to-finish pork producers saw their margins improve $3 per head with profits of $50. Lean carcass prices traded at $84.64 per cwt., $1.91 per cwt. higher than the previous week, and $3.65 higher than a month ago. A year ago pork producer margins were positive $16 per head. Pork packer margins averaged a loss of $3 per head last week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $153 per cow. That would be modestly 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 $72 per head in 2019, which would be $48 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $167 per head in 2019, about $2 less than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $17.50 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $15 per head in 2019, about $5 less than the $20 per head profits of 2018.

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