Profit Tracker: Cattle Margins Crumble, Hog Margins Solid

Cattle and hog finishing margins were headed in opposite directions last week, with lean hog prices enjoying a three-week rally while cattle prices were stuck in neutral for a second week.

Despite average cash fed cattle prices steady with the previous week, cattle feeding profit margins crumbled last week. Average feedyard margins ended the final week of February at $14 per head, down $68 per head, according to the Sterling Beef Profit Tracker. Cash fed cattle prices averaged $114 per cwt., steady with the previous week and nearly $1 lower than last year.

Average closeouts show increasing costs, with $8 more per head for feed and $40 per head more for feeder cattle. The result is total costs for finishing a steer above year ago at $1,538 per head compared to $1,498 last year.

Packer margins increased $33 per head to an average of $430. The result was a packer/feeder margin spread of $416 per head, up $110 from the previous week’s $306.

Beef packer capacity utilization was estimated at 91.8%, up 15.7% from the previous week, with an estimated 666,000 head slaughtered. A year ago packer capacity was estimated at 88.3% with a weekly kill of 643,382 head. Carcass weights this year are running 13 pounds heavier at 844 pounds.

Beef packer margins saw gains based on a $4 per cwt. gain in the beef cutout to $239.19. A year ago the cutout average $205.35. A year ago packer profits were $69 per head. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins gain significantly with positive margins for the fourth consecutive week, with profits of $30 per head. Lean carcass prices traded at $78.90 per cwt., an increase of $6.64 per cwt. from the previous week, and $20 per cwt. higher than a month ago. A year ago pork producers lost an average of $17 per head.

Pork packer margins averaged a profit of $21 per head, down $9 per head from the previous week, but $5 per head higher than last year. Pork packer capacity utilization was estimated at 86.5% compared to 96.5% 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 $1 per head in 2021, and packer margins are projected to average $303 per head.

For farrow-to-finish pork producers, Nalivka projects 2021 will produces losses of $12 per head. Pork packers are projected to earn $49 per head in 2021.

Related stories:

Wholesale Beef Higher, But Cash Cattle Struggle


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