Beef Profit Tracker: Packer Margins See Slight Relief as Capacity Shifts

There is plenty of activity in the packing industry regarding plants and capacity.

1. Tyson officially closed Lexington on Jan. 16 and took one shift off at Amarillo
2. Cargill closed Fort Morgan in response to union demands — offered a settlement that was not accepted by the union
3. JBS announces closure of plant in Souderton, Pa., to take place on Aug. 24 and decided to convert the plant to a value-added plant
4. Tyson announces on Aug. 13 the closure of plant at Joslin, Ill., and they will sell the plant in Wallula, Wash. (Tri-Cities)
5. Cargill announces that they will reopen the plant in Fort Morgan on Sept. 7 after union settlement

With the shuffling and announcements, packer margins (Sterling calculation) improved marginally last week to average -$142.87/head compared to -$172.65/head the prior week. The Comprehensive Cutout Value was up nearly $7/cwt to average $371.14/cwt. for the week while 5-Area Direct Steers fell $7/cwt. to average $228.53/cwt.

Again, I use the prior week’s steer price for this week’s packer margin and that was $235.23/cwt. Feedlot margins were down sharply with last week ‘s lower steer price with Sterling’s estimated average for the week at -$130.68/head.

Fed plant utilization improved somewhat to average 79.5% with fed slaughter estimated at 421,355 head, up 6,500 head from the prior week.

View the full Sterling Beef Profit Tracker for the week ending Aug. 15.

The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.

(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices. The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs. Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)