Profit Tracker: Surging Cutout Lifts Packer Profits
Beef cutout prices gained $7.22 per cwt last week, producing a $40 per head gain in packer margins which now stand at $182 per head. Feedyard margins slipped about $1 per head, yet cash closeouts continue to post profits of $107, according to the Sterling Beef Profit Tracker.
Cash cattle prices gained $1.50 per cwt., with the 5-area average at $124.82. The cost of finishing a steer last week was calculated at $1,629, which is $198 higher than the $1,431 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
A month ago cattle feeders were losing $36 per head, while a year ago profits were calculated at $577 per head. Feeder cattle represent 75% of the cost of finishing a steer compared with 74% a year ago.
Farrow-to-finish pork producers saw their margins decline $2 to a $5 per head profit. Lean carcass prices traded at $60.98 per cwt., a $0.71 per cwt. improvement from the previous week. A year ago pork producers earned an average of $13 per head. Pork packer margins gained $1 per head to $9.
Cash prices for fed cattle are $20 per cwt. lower than the same week a year ago. Lean hog prices are about $4 per cwt. lower 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 $51 per head in 2018, which would be $185 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $118 per head in 2018, up from $120 in 2017.
For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average a loss of $1.25 per head, compared to profits of $21 in 2017. Pork packers are projected to earn $18 per head in 2018, down from $25 profit per head in 2017.