Packer Margins Ease Lower
Packer margins slipped below $300 per head for the first time in a month. While packer margins declined $43 per head last week, average profits remained at $288. Feedyard closeouts, however, edged into the red by $50 per head after posting profits of $17 per head the week before, according to the Sterling Beef Profit Tracker.
Feedyard profitability declined as a result of the $4 per cwt. drop in fed cattle prices to $110.88. The beef cutout declined an average of $3.03 per cwt., ending the week at $219.70. The cost of finishing a steer last week was calculated at $1,593, which is $179 higher than the $1,414 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
A year ago cattle feeders were earning $388 per head. Feeder cattle represent 74% of the cost of finishing a steer compared with 72% a year ago.
Farrow-to-finish pork producers saw their margins improve $14 to a $48 per head. Lean carcass prices traded at $83.27 per cwt., a $7.25 per cwt. improvement from the previous week. A year ago pork producers earned an average of $52 per head. Pork packer margins averaged a loss of $11 per head.
Cash prices for fed cattle are $18 per cwt. lower than the same week a year ago. Lean hog prices are about $1 per cwt. lower than last year.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $128 per cow. That would be $30 per head less than the estimated average profit of $158 for 2017. Estimated average cow-calf margins were $173 in 2016, and $438 per cow in 2015.
For feedyards, Nalivka projects an average profit of $51 per head in 2018, which would be $185 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $147 per head in 2018, up from $120 in 2017.
For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average a loss of $1.72 per head, compared to profits of $21 in 2017. Pork packers are projected to earn $13 per head in 2018, down from $25 profit per head in 2017.