Profit Tracker: Packer Margins Lowest In Five Months

Feedyards saw modest profits last week.
Feedyards saw modest profits last week.
(FJ)

Beef packer margins declined $81 per head last week to a total average profit of $175 per head, the lowest total since before the Tyson packing plant fire August 9. Higher cash cattle prices and an $8 decline in the beef cutout price led to the lower margins, according to the Sterling Beef Profit Tracker.

Cattle feeders saw steady to $1 higher cash prices, yet average closeout margins fell $13 per head for modest average profits of $68 per head. The packer/feeder margins spread declined $67 last week to $107.

A year ago cattle feeders found profits of $32 per head on closeouts the second week in December, while packers saw profits of $136, for a spread of $104.

(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 73% of the cost of finishing a steer compared to 72% 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 $4 per head, putting losses at $26 per head. Lean carcass prices traded at $49.49 per cwt., $2.25 per cwt. better than the previous week. A year ago pork producers were losing $26 per head. Pork packers saw average profits of $61 per head, a decrease of $3 per head from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins cow-calf producers in 2019 will average $134 per cow. That would be 17% lower compared to the $162 estimated average profit for 2018. Estimated average cow-calf margins were $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $104 per head in 2019, which would be $80 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $238 per head in 2019, about $18 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $3 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $46 per head in 2019, about double last year’s profits.

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