Profit Tracker: Margins Retreat On Lower Prices

Cattle prices slipped $2

Cattle feeding margins slipped $24 per head the week ending Jan. 31 as cash fed cattle prices fell $2. Average feedyard closeouts found profits of $185 per head, according to the Sterling Beef Profit Tracker.

Beef packer margins declined $6 per head to an average of $70. The packer/feeder margin spread for the week ending Jan. 31 narrowed to $115 per head in favor of feedyards. The packer/feeder margin spread reached a record high the week ending September 13, 2019, about a month after the Tyson fire. That week saw the packer/feeder margin spread reach $618 per head, in favor of packers, as cattle feeders lost $203 per head and beef packers saw profits of $415 per head.

The difference between the $618 advantage for packers in September and the $115 advantage for feedyards last week represents a $733 swing in the packer/feeder margin spread over the past five months.  

A year ago cattle feeders found profits of $102 per head on closeouts the third week in January, while packers also saw profits of $102. (Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Feeder cattle represent 71% of the cost of finishing a steer compared to 71% a year ago. 

The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.  

Farrow-to-finish pork producers saw their margins improve $6 per head to losses of $6. Lean carcass prices traded at $56.59 per cwt., $2.58 per cwt. better than the previous week. A year ago pork producers were losing $11 per head. Pork packers saw average profits of $26 per head, a decrease of $17 per head from the previous week.

Sterling Marketing president John Nalivka projects cow-calf profit margins of $144 per cow in 2020, or $27 per cow better than 2019. Estimated average cow-calf margins were $162 in 2018, $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka calculates an average profit of $112 for 2020, or $73 per head better than the estimated $39 per head in 2019. Average profits per head were estimated at $24 in 2018, and $181 in 2017. Nalivka said packer margins averaged about $216 per head in 2019, and he projects average profits of $200 per head for packers in 2020.

Related stories:

Cash Cattle Markets And CME Futures Lower


Latest News

Nebraska Sandhills
Nebraska’s AL Ranch Listed

The AL Ranch, Halsey, NE, supports a 700-head cow-calf operation and has a backgrounding facility for 2,500-head. The ranch consists of 7,052 deeded acres and the balance in National Forest grazing permits.

2 days ago
Wareham's daughters helped him gather and sort cows recently.
Jared Wareham: Are Balanced Trait Genetics a Long-Term Answer?

Genetic progress has helped drive our industry forward and each segment along the value chain has benefited from advancements in genetics. Have we moved the needle enough with regard to total beef system profitability?

8 min ago
Angus VNR: Making Forward Progress

It's no secret market access is grounded in consumer demands. Dustin Aherin, RaboResearch analyst, shares supply-chain dynamics and what it means to the future.

2 hours ago
Josie, Josh and Gwen Hoy, Flying W Ranch
Hoy Family’s Flying W Ranch Receives Kansas Leopold Conservation Award

Josh and Gwen Hoy’s Flying W Ranch of Cedar Point has been selected as the recipient of the 2020 Kansas Leopold Conservation Award®.

59 min ago
Cattle and hog feeding margins steady
Profit Tracker: Cattle, Hog Margins Steady

Cattle and hog feeding operations saw their margins remain modestly profitable last week with little movement in cash prices. Both cattle and hog feeding margins are higher than last year at the same time.

1 hour ago
Thanksgiving may look different in 2020, but farmers are still the focus.
Let’s Talk Turkey, Thanksgiving and Traditions

Thanksgiving may look different in 2020, but farmers are still the focus.

5 hours ago