Profit Tracker: Rally Erases Red Ink
A $3 per cwt. rally in fed cattle prices produced a $135 per head improvement in feedyard closeouts last week, erasing a $43 per head loss and producing a $92 profit. The 5-area direct steer price was $121.78 per cwt., up from the previous week’s $119.18, according to the Sterling Beef Profit Tracker.
Closeouts also benefitted from a decrease in the cost of feeder cattle calculated against last week’s marketings. The price of feeder cattle calculated against the fed cattle sales were $153.71, or, $12.57 per cwt. lower. The cost of finishing a steer last week was calculated at $1,602, which is $236 higher than the $1,366 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
Beef packer operating margins slipped $51 per head to $123. The beef cutout declined $1.66 per cwt. to $209.74.
A month ago cattle feeders were earning $127 per head, while a year ago profits were calculated at $461 per head. Feeder cattle represent 74% of the cost of finishing a steer compared with 72% a year ago.
Farrow-to-finish pork producers saw their margins improve slightly to a $2 per head loss, compared with losses of $18 per head last week. Lean carcass prices traded at $57.41 per cwt., a $7.03 per cwt. improvement from the previous week. A year ago pork producers lost an average of $5 per head. Pork packer margins improved $8 per head to $33.
Cash prices for fed cattle are $10 per cwt. lower than the same week a year ago. Lean hog prices are about $1 per cwt. higher than last year.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $115 per cow. That would be $43 per head less than the estimated average profit of $158 for 2017. Estimated average cow-calf margins were $173 in 2016, and $438 per cow in 2015.
For feedyards, Nalivka projects an average profit of $67 per head in 2018, which would be $169 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $135 per head in 2018, up from $120 in 2017.
For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average $4 per head, compared to $21 in 2017. Pork packers are projected to earn $19 per head in 2018, down from $25 profit per head in 2017.