Profit Tracker: Ugly Trend Continues

The packer/feeder margin spread narrowed $67 per head. ( FJ )

Improvements in feedlot margins were ever so slight last week due to a $1 gain in cash cattle prices. Still, feedlots lost $154 per head on average, about $10 less than losses the previous week. Packer margins tallied $330 per head, $57 less than two weeks ago. The combination resulted in a modest narrowing of the packer/feeder margin spread to $484, according to the Sterling Beef Profit Tracker.

(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 improve $5 per head with average losses of $23. Lean carcass prices traded at $50 per cwt., $2.703 per cwt. higher than the previous week. A year ago pork producer margins were negative $0.03 per head. Pork packers saw average profits of $35 per head, steady with the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $124 per cow. That would be 13% 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 $46 per head in 2019, which would be $22 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 $6 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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Profit Tracker: Packer/Feeder Margins Spread Narrows

 

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