Profit Tracker: Packers Gain Modest Leverage
Cattle feeders found average profits of $439 per head the week ended June 17, or $70 per head less than the previous week as average cash prices declined. The week’s 5-area direct price was $186.06 per cwt., which is $3 per cwt. lower than the previous week, according to the Sterling Beef Profit Tracker.
Despite paying at least $5 per cwt. more for cattle last week,
Beef packers saw their average profits leap nearly $100 per head higher to $172 per head. That’s a result of lower cattle costs and further increases in wholesale beef prices. Average beef cutout prices advanced $14 per cwt. to an average of $335 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Oregon.
Cattle sold last week carried a total feed cost of $573 per head, down about $16 per head from the previous week, but 16% higher than the $482 feed costs for cattle sold the same week a year ago.
Cattle marketed last week had a breakeven of $154.72 per cwt., while cattle placed on feed last week have a breakeven of $177.30 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $227.71 per cwt., and feed costs of $512 per head. The feeder steer price is 30% higher than last year.
The estimated total cost for finishing a steer last week was $2,166 per head, up 15% from last year’s estimate of $1,837 per head.
Fed cattle slaughter totaled an estimated 504,664 head, about 20,000 head fewer than the same week last year. Packing plant capacity utilization was estimated at 88.2% compared to 91.7% last year.
Farrow-to-finish hog producers saw profits of about $14 per head last week, about $1.50 per head more than the previous week. Pork producers saw profits of $85 per head the same week a year ago. Lean carcass prices averaged $94.78 per cwt., up $0.80 per cwt. from the previous week.
Pork packers lost an average of $19 per head last week after losses of $25 the week before. Last year pork packers were losing about $32 per head. Hog slaughter was estimated at 2.330 million head, down 18,000 from the week before, and down 32,000 head from last year.
Pork packer capacity utilization was estimated at 85.6% compared to 85.3% last year.
(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices. The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs. Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)
