Profit Tracker: Huge Packer Margins

Feedyard closeouts for the Thanksgiving week were in the black for the 10th consecutive week, according to the Sterling Beef Profit Tracker. Under normal conditions that would be the headline generating observation from the Profit Tracker, but the beef complex continues to defy any resemblance of normal.

Last week beef packers found average profit margins of $519 per head, based on calculations by Sterling Marketing. That was an increase of $75 per head from the previous week, and despite the fact cash fed cattle prices increased $1 per cwt. to an average of $110.

Feedyards found average profits of $88 per head last week, down slightly from the $96 profits the week before. The decline was the result of slightly higher feeder steer prices factored into the calculations. A year ago cattle feeders were earning $108 per head. Feeder cattle represent 69% of the cost of finishing a steer compared with 73% a year ago.

Last week’s beef cutout gained nearly $9 per cwt., and that was after a $10 per cwt. gain the previous week. The result was a cutout price of $240 in the Profit Tracker calculation.

The cost of finishing a steer last week was calculated at $1,407, which is $92 lower than the $1,499 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins slop $3 per head to $6 profit. Lean carcass prices traded at $59.37 per cwt., down $0.73 per cwt., $5.15 lower than a month ago. A year ago pork producers lost an average of $41 per head. Pork packer margins averaged a profit of $35 per head last week, up $2 from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2020 will average $51 per cow. For feedyards, Nalivka projects an average profit of $10 per head in 2020, and packer margins are projected to average $281 per head.

For farrow-to-finish pork producers, Nalivka projects 2020 will produces losses of $18 per head. Pork packers are projected to earn $48 per head in 2020.

 

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