Profit Tracker: Packers Reduce Harvest as Margin Woes Worsen

Beef packers see their margins slip further into the red the week ending Sept. 30. Packer losses totaled $89 per head, $23 per more than the previous week, according to the Sterling Beef Profit Tracker. Cattle feeding margins slipped modestly but finished the week with average profits of $300 per head. The packer-feeder margin spread widened to $389 per head in favor of cattle feeders.

For the week ending September 30, cash cattle prices averaged $183.97 per cwt., down about $1.28 from the previous week. That price is 21% higher than last year’s $145.25 per cwt. cash price.

Wholesale beef prices posted an average of $297.05 per cwt., a $2.26 per cwt. decline from the previous week and a $14.02 decline the past month. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.

Cattle sold last week carried a total feed cost of $530 per head, down about $34 per head from the previous week, and about $66 less than feed costs for cattle sold the same week a year ago.

Cattle marketed last week had a breakeven of $162.55 per cwt., while cattle placed on feed last week have a breakeven of $183.37 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $255.09 per cwt., and feed costs of $375.59 per head. The feeder steer price is 32% higher than last year.

The estimated total cost for finishing a steer last week was $2,275 per head, up 13% from last year’s estimate of $1,975 per head.

Fed cattle slaughter totaled an estimated 491,808 down 10,192 head from the previous week and 39,930 fewer than the same week last year. Packing plant capacity utilization was estimated at 81.9% compared to 90.9% last year.

Farrow-to-finish hog producers saw losses of $7 per head last week after mostly breakeven margins the week before. Pork producers saw profits of $18 per head the same week a year ago. Lean carcass prices averaged $77.77 per cwt., down $2.70 per cwt. from the previous week.

Pork packers closed the week with $32 per head profits, up $2 per head from the previous week. Last year pork packer margins were negative $3 per head. Hog slaughter was estimated at 2.604 million head, up 67,000 head from the week before and up 119,000 head from last year.

Pork packer capacity utilization was estimated at 96.1% compared to 90.0% 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.)