Last week’s $5 decline in fed cattle prices shaved $100 off margins, leaving the average profit for cattle marketed at $62 per head. The margin retreat left feeding profits below average packer profits for the first time in 2020. Average packer margins increased $15 per head to $85, according to the Sterling Beef Profit Tracker.
Cash cattle prices averaged $114.74 per cwt., compared to $122 a month prior. Cash prices are roughly $14 per cwt. lower than the same period a year ago.
The packer/feeder margin spread for the week ending Feb. 29 was $23 per head in favor of packer. The packer/feeder margin spread reached a record high the week ending September 13, 2019, about a month after the Tyson fire. That week saw the packer/feeder margin spread reach $618 per head, in favor of packers, as cattle feeders lost $203 per head and beef packers saw profits of $415 per head.
A year ago cattle feeders found cash profits of $150 per head on closeouts the last week in February, while packers saw profits of $76. (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 71% of the cost of finishing a steer compared to 72% 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 nearly $2 per head, yet losses remain at $18. Lean carcass prices traded at $51.59 per cwt., $0.07 per cwt. higher than the previous week. A year ago pork producers were losing $24 per head. Pork packers saw average profits of $20 per head, steady with the previous week.
Sterling Marketing president John Nalivka projects cow-calf profit margins of $142 per cow in 2020, or $24 per cow better than 2019. Estimated average cow-calf margins were $162 in 2018, $164 in 2017, $176 in 2016, and $438 per cow in 2015.
For feedyards, Nalivka calculates an average profit of $107 for 2020, or $68 per head better than the estimated $39 per head in 2019. Average profits per head were estimated at $24 in 2018, and $181 in 2017. Nalivka said packer margins averaged about $216 per head in 2019, and he projects average profits of $163 per head for packers in 2020.
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