Profit Tracker: Packer/Feeder Margin Spread Under $400
The combination of shrinking packer profits and smaller feedyard losses over the past month brings the packer/feeder margin spread to $396 for the week ending Oct. 4, 2019. While the spread remains large, it’s down 27% from the $546 spread found August 23.
A year ago cattle feeders lost an average of $83 per head on closeouts the first week in October, while packers saw profits of $171, for a spread of $254.
Last week’s near $4 rally in cash fed cattle prices helped reduce cattle feeding losses $42, yet average per head losses still totaled $113, according to the Sterling Beef Profit Tracker. Packer margins shrunk $47 per head as a result of the higher cash prices, but packers still saw profits of $283.
(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 72% of the cost of finishing a steer compared to 75% 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 remain the same with losses of $23 per head. Lean carcass prices traded at $52.16 per cwt., $2.16 per cwt. higher than the previous week. A year ago pork producer profits were $3 per head. Pork packers saw average profits of $38 per head, an increase of $3 from the previous week.
Sterling Marketing president John Nalivka projects cash profit margins cow-calf producers in 2019 will average $124 per cow. That would be 13% lower compared to the $161 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 $46 per head in 2019, which would be $22 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $192 per head in 2019, about $23 higher than in 2018.
For farrow-to-finish pork producers, Nalivka projects an average profit of $6 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $16 per head in 2019, about $4 less than the $20 per head profits of 2018.