Profit Tracker: Margins Hold Firm

Cattle feeding margins hold steady above $125 per head.
Cattle feeding margins hold steady above $125 per head.
(Wyatt Bechtel)

Margins for both cattle feeders and beef packers slipped some last week, but profits remain solid. Cattle feeders saw a $2 per cwt. decline in fed cattle prices, and a $13 per head decline in profit margins. Average closeouts reported profits of $127 per head, according to the Sterling Beef Profit Tracker.

The 5-area average Choice steer price last week was $125.49, while the price of feeder cattle calculated against the fed cattle sales were $156.43 per cwt., or $1.28 per cwt. lower. The cost of finishing a steer last week was calculated at $1,619, which is $299 higher than the $1,320 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Beef packer operating margins declined $3 per head to $156, despite a steady beef cutout to $223.07 per cwt.

A month ago cattle feeders were earning $174 per head, while a year ago profits were calculated at $492 per head. Feeder cattle represent 75% of the cost of finishing a steer compared with 71% a year ago.

Farrow-to-finish pork producers saw their margins decline $8 per head to a $1 per head loss. Lean carcass prices traded at $56.70 per cwt., a decline of $4.50 from the previous week. A year ago pork producers earned an average of $23 per head. Pork packer margins improved $5 per head to $22.

Cash prices for fed cattle are $5 per cwt. lower than the same week a year ago. Lean hog prices are about $12 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $133 per cow. That would be $25 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 $84 per head in 2018, which would be $152 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $92 per head in 2018, down from $120 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average $11.25 per head, compared to $20.87 in 2017. Pork packers are projected to earn $18 per head in 2018, down from $25 profit per head in 2017.


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