Profit Tracker: Packer/Feeder Margin Spread Flips To Favor Feeders

Cattle in feedyard
Cattle in feedyard

Cattle feeding margins exceeded packer margins last week for the first time in more than two years. Cattle feeders saw average profits of $151 per head last week while packer margins slipped to $35 per head, according to the Sterling Beef Profit Tracker. That means the packer/feeder margins spread is $116 in favor of feedyards.

The packer/feeder margins 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 $116 advantage for feedyards last week represents a $734 swing in the packer/feeder margins spread over the past four months.

According to the Sterling Beef Profit Tracker, packer margins of $35 per head last week were the lowest since the week ending May 19, 2018.

Cattle feeders saw cash prices $2 higher last week, resulting in a $67 per head improvement in profit margins to the week’s average of $151.

A year ago cattle feeders found profits of $78 per head on closeouts the first week in January, while packers saw profits of $94, for a spread of $16 in the packers’ favor.

(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 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 $3 per head, putting losses at $16 per head. Lean carcass prices traded at $52.55 per cwt., $1.93 per cwt. better than the previous week. A year ago pork producers were losing $18 per head. Pork packers saw average profits of $37 per head, a decrease of $8 per head from the previous week.

Sterling Marketing president John Nalivka said cash profit margins for cow-calf producers in 2019 averaged $114 per cow. That would be 30% 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 calculated an average profit of $39 per head in 2019, which would be $15 better than the average of $24 per head in 2018. Nalivka said packer margins averaged about $220 per head in 2019.

Related stories:

Fed Cattle Rally Carries Into New Year


Latest News

Winter cattle feeding
Cash Cattle Weaker As Grain Rallies

Cash cattle prices slipped lower throughout the week as packer demand was called moderate. Grain markets posted a significant rally on the heels of USDA's report on Tuesday.

2 hours ago
Packing plant workers
Fired Tyson Managers: ‘Betting Pool’ Stories Distorted

Former Tyson Foods Waterloo, Iowa, plant managers dispute claims of how an "office pool" regarding COVID-19 was portrayed in news stories and deny it was about how many employees would contract the virus.

1 hour ago
Dream Lake with Hallett Peak in the background, at Rocky Mountain National Park.
Hi-Plains Researchers To Help Protect Rocky Mountain National Park

A Texas A&M AgriLife team will work with the Colorado Livestock Association and other stakeholders to refine and evaluate practices to reduce agricultural ammonia emissions into Colorado’s Rocky Mountain National Park.

12 min ago
AL Ranch
Beef. It’s What’s For Dinner. Launches “MBA NextGen”

MBA NextGen updates the popular MBA training modules making it easier than ever for a new generation of farmers and ranchers to share their story and advocate knowledgeably for the beef industry.

8 min ago
Greg Henderson
Overall Meat Sales Higher In 2020

Meat sales - both dollar values and volume - were significantly higher in 2020. Those gains, however, came at the expense of a crippled restaurant and food service industry that may take years to recover.

9 min ago
Progressive Beef
Progressive Beef and Wendy’s® Advance Partnership

Wendy's announces 15% increase in percentage of beef sourced through Progressive Beef-certified producers in 2020; on track to meet goal of at least 50% this year.

14 min ago