Profit Tracker: Margins Weak, But Positive

(Wyatt Bechtel)

Feedyard profit margins rebounded slightly after last week’s $2 rally in the cash fed cattle market, though average closeouts were just above $43 per head. It was an increase of $19 per head, and represented the 45th consecutive week of positive margins, according to the Sterling Beef Profit Tracker.

Beef packers earned an average of $161 on every animal processed, a decline of $16 from the previous week. The 5-area direct cash fed cattle price was $108.45, about $2.53 per cwt. higher, while the beef cutout price was $191.43, up about $0.79 per cwt.

Break even prices for steers sold last week averaged $105.29 per cwt., $1.14 higher than the previous week. However, cattle placed on feed last week have a projected breakeven of $114.19 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

The cost of finishing a steer last week was calculated at $1,466 per head, which is $149 less than the $1,615 a year ago. A month ago cattle feeders were earning $16 per head, while a year ago losses were calculated at $89 per head. Feeder cattle represent 74% of the cost of finishing a steer, compared to 75% last year.

Farrow-to-finish pork producers lost an average of $14 per hog last week, $10 per head more than the previous week. A month ago farrow-to-finish pork producers showed a profit of $28 per head.

Pork packers saw their margins steady at $38 per head. Negotiated prices for lean hogs were $52.64 per cwt., a $4.62 decline. Cash prices for fed cattle are $1 lower than the same week a year ago, and prices for lean hogs are about $2 per cwt. lower.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $126 per cow. That would be $51 per head less than the estimated average profit of $177 for 2016. Estimated average cow-calf margins were $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $186 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $146 per head in 2017, up from $114 in 2016.

For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $25 per head, compared to $5 per head last year. Pork packers are projected to earn $23 per head in 2017, down slightly from $24 profit per head in 2016.


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