Profit Tracker: Profit Margins Erode For Cattle And Hogs

Cattle and hog finishing margins are both positive for the sixth consecutive week, but margins have eroded significantly.

Cattle feeding margins posted average profits of $20 per head last week, $21 per head less than the previous week and $102 less than a month ago. Cash prices for fed cattle declined nearly $1 per cwt. on average to $103 per cwt., according to the Sterling Beef Profit Tracker.

Cattle marketed last week were purchased last spring at prices diminished significantly by the onset of the coronavirus pandemic. Feeder steer prices factored into last week’s Profit Tracker were $130.83 per cwt., which is $6.86 per cwt. lower than last year. Those lower feeder cattle prices produced an average breakeven of $102.33 for cattle marketed last week. The previous week’s breakeven price was $101.50 per cwt., and a year ago the breakeven was $110.39 per cwt. A year ago cattle feeders lost an average of $40 per head.

Packer margins increased $16 per head last week to $273. Last week’s beef cutout price averaged $205 per cwt., a decline of $1 per cwt.

Feedyard margins reported by the Sterling Profit Tracker, Sterling Marketing, Vale, Ore., are calculated on a cash basis only with no adjustment for risk management practices.

(Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Sterling Marketing projects 2020 feedyard margins to average $10 profit per head, while annual packer profits are projected at $314 per head. Cash cow-calf margins for 2020 are projected at $57 per calf.

Farrow-to-finish pork producers have seen their margins improve this fall with rising lean carcass prices.  Last week saw average closeouts post $17 per head profits, about $3 per head lower than the previous week, and $7 per head less than a month ago.

Lean hog carcass prices traded at $64.52 per cwt., $1.69 per cwt. less than the previous week. Lean carcass prices are $1.75 per cwt. lower than a month ago, and $13.28 higher than the same week a year ago. A year ago pork producers lost an average of $28 per head.

Pork packers saw average profits of $42 per head last week, down $17 from the previous week.

Sterling Marketing projects 2020 annual per head losses for pork producers at $18 per head, while projected packer profits are $59 per head.

(Editor’s note: Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

Related stories:

Cattle Markets Hampered By Season's First Storm


Latest News

Tyson Announces Support for U.S. CattleTrace

Beef industry efforts to develop a voluntary animal traceability system gained significant traction today as Tyson Fresh Meats becomes the first beef processor to invest in membership to U.S. CattleTrace.

Bull Breeding Soundness Evaluations

Before bulls are turned out this spring a complete breeding soundness evaluation (BSE) should be conducted by a veterinarian, including a physical examination, reproductive tract examination, and semen evaluation.

Keeping the First Calf Heifers on Track

Heifers conceiving early in their first breeding season will have increased lifetime production and efficiency. It is critical heifers attain enough weight to initiate their first estrous before the onset of breeding.

Stepped-Up Basis Repeal Would Be Detrimental to Ranches

Study says this tax increase, whether via tax at death or carryover of basis, will have negative impacts on family-owned businesses, US gross domestic product, and job creation both in the immediate and long term.

Nutrition Communications Workshop in Iowa

The Iowa Beef Industry Council (IBIC) recently hosted a nutrition communications workshop for dietetic graduate students enrolled in the University of Iowa’s Master of Clinical Nutrition Program.

Wendy's Corporate Responsibility Efforts and New Goals

Wendy's will focus on responsible sourcing, sustainable packaging, greenhouse gas reduction and increasing diversity within its leadership, management, and franchisees.