Profit Tracker: Feeding Margins Fall To The Red

The $4 per cwt decline in cash fed cattle prices pushed cattle feeding margins $115 per head lower.
The $4 per cwt decline in cash fed cattle prices pushed cattle feeding margins $115 per head lower.
(Wyatt Bechtel)

The $4 per cwt decline in cash fed cattle prices pushed cattle feeding margins $115 per head lower, erasing profits and ending the week $36 per head in the red. Over the past month cattle feeding margins have declined $230 per head, according to the Sterling Beef Profit Tracker.

The 5-area average Choice steer price last week was $116.61, while the price of feeder cattle calculated against the fed cattle sales were $161.24 per cwt., or $7.24 per cwt. higher. The cost of finishing a steer last week was calculated at $1,659, which is $290 higher than the $1,369 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Beef packer operating margins gained $20 per head to $191, despite a $4 decline in the beef cutout to $215.87 per cwt.

A month ago cattle feeders were earning $195 per head, while a year ago profits were calculated at $365 per head. Feeder cattle represent 75% of the cost of finishing a steer compared with 72% a year ago.

Farrow-to-finish pork producers saw their margins decline $7 per head to a negative $21 per head. Lean carcass prices traded at $47.69 per cwt., a decline of $3.72 from the previous week. A year ago pork producers earned an average of $8 per head. Pork packer margins improved $6 per head to $38.

Cash prices for fed cattle are $8 per cwt. lower than the same week a year ago. Lean hog prices are about $14 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $115 per cow. That would be $43 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 $67 per head in 2018, which would be $169 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $135 per head in 2018, up from $120 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average $4 per head, compared to $21 in 2017. Pork packers are projected to earn $19 per head in 2018, down from $25 profit per head in 2017.


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