Profit Tracker: $40 Gains, Packers Slip

Last week’s $2.50 rally in the cash market was another step in the right direction, but closeouts remain $26.46 per cwt. short of break even. Cattle feeding margins improved $40 per head which left losses at $343, according to calculations by Sterling Marketing, Vale, Ore.

Last week’s 5-area cash price was $136.69 per cwt., well short of the $163.15 per cwt. required to break even. Beef packer margins declined $37 per head, resulting in average profits of $13 on every animal processed. Packer margins have declined $70 per head in the past month.

A month ago cattle feeders were losing $360 per head, while a year ago profits were pegged at $213 per head, according to Sterling Marketing. Feeder cattle represent 79% of the cost of finishing a steer, significantly higher than last year’s 74%.

A month ago beef packers were earning $83 for every animal processed, while a year ago packers were losing $69, Sterling Marketing estimates.

Farrow-to-finish pork producers showed a profit margin of $14 per hog last week, a decrease of $3 per head from the previous week and up $1 from a month ago.

Pork packers saw their margins improve $2 per head to $23. Negotiated prices for lean hogs were $71.56, per cwt. last week, a decrease of $1.38 per cwt. from the previous week. Cash prices for fed cattle are $32 per cwt. lower than last year, and negotiated hog prices are $23 per cwt. lower than last year.

Nalivka projects average cash profit margins for cow-calf producers at $490 per cow this year. Last year’s estimated average cow-calf margins were $526 per cow. Cow-calf profits for 2016 are projected at $277 per cow.