Profit Tracker: Cattle, Hog Margins Improve
Cattle feeding margins improved $60 per head last week to an average of $85, according to the Sterling Beef Profit Tracker. Most of the inputs into closeouts are similar to year ago – except cash cattle are trading $5 per cwt. below last year. A year ago cattle feeders saw average profits of $160 per head as negotiated prices averaged $119.
Total costs for finishing a steer averaged $1,462 per head, about $6 per head higher than the second week of February last year.
Cash prices paid to cattle feeders the week ending Feb. 12 averaged $113.76 per cwt., or about $0.25 per cwt. higher than the previous week. Packer margins declined $22 per head, yet remain historically large at $367. The result is a packer/feeder margins spread of $282 per head, down $85 from the previous week’s $367.
Beef packer capacity utilization was estimated at 83.9%, down 5.7% from the previous week, with an estimated 611,000 head slaughtered. A year ago packer capacity was estimated at 86.3% with a weekly kill of 621,342 head. Carcass weights this year are running 12 pounds heavier at 846 pounds.
Beef packer leverage in the current market is evident in the fact cash cattle prices are $5 per cwt. lower than the same week a year ago, yet the beef cutout price was $22 per cwt. higher. A year ago packers saw profits of $77 per head while feeding margins were $160 per head. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
Farrow-to-finish pork producers saw their margins in positive territory for the second consecutive week, with profits of $14 per head. Lean carcass prices traded at $69.10 per cwt., an increase of $4.61 per cwt. from the previous week, and $13 per cwt. higher than a month ago. A year ago pork producers lost an average of $20 per head.
Pork packer margins averaged a profit of $29 per head, down $1 per head from the previous week, but $14 per head higher than last year. Pork packer capacity utilization was estimated at 94.8%, compared to 92.2% a year ago.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2021 will average $123 per cow. For feedyards, Nalivka projects an average profit of $43 per head in 2021, and packer margins are projected to average $251 per head.
For farrow-to-finish pork producers, Nalivka projects 2021 will produces losses of $13 per head. Pork packers are projected to earn $37 per head in 2021.