Feeding Margins Now Exceed Packer Margins
Last week marked the first time in more than a year cattle feeding margins exceeded packer margins. Feedyard closeouts improved $27 per head last week to $104, following a $1 increase in cash cattle prices. Packer margins slipped $20 per head to $87 following a $2 per cwt. decline in the beef cutout, according to the Sterling Beef Profit Tracker.
Sterling Marketing’s Dec. 1, 2017, Beef Profit Tracker was the last time cattle feeding margins had exceeded packer margins, with feeder margins at $131 and packer margins calculated at $101 per head. In June of 2018, packer margins had climbed to $285 per head, while cattle feeders lost an average of $70 on every animal shipped.
For the week ending Jan. 11, cash cattle sold for an average of $124 per cwt., while the beef cutout closed the week at $212.76. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
A year ago cattle feeders were earning an average of $67 per head. Feeder cattle represent 72% of the cost of finishing a steer compared with 74% a year ago.
Farrow-to-finish pork producers saw their margins improve $6 per head, but still saw losses of $12. Lean carcass prices traded at $53.06 per cwt., $4.12 per cwt. better than the previous week, and $4.82 better than a month ago. A year ago pork producer margins were a positive $26 per head. Pork packer margins averaged a profit of $27 per head last week.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $162 per cow. That would be steady compared to the $164 estimated average profit for 2017. Estimated average cow-calf margins were $176 in 2016, and $438 per cow in 2015.
For feedyards, Nalivka projects an average profit of $41 per head in 2019, which would be $17 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $159 per head in 2019, about $10 less than in 2018.
For farrow-to-finish pork producers, Nalivka projects an average loss of $2 pere head in 2019, as compared with an average profit of $1 per head in 2018. Pork packers are projected to earn $22 per head in 2019, about $2 more than the $20 per head profits of 2018.