Profit Tracker: Packer Margins Went Up How Much?!
As expected, beef packer margins jumped wildly higher the week ending Aug. 17, while cattle feeding margins slipped into the red. According to the Sterling Beef Profit Tracker, packer margins topped $358 per head last week, or $167 higher than the previous week.
Cattle feeders saw their margins decline from an average of $24 per head profit to a $28 per head loss.
Those swings in profitability were driven by a cash fed cattle market at $5 per cwt. lower and a Choice beef cutout that was $14 per cwt. higher, both the result of market volatility following the Tyson fire incident at its Holcomb, Kan., plant.
A year ago cattle feeders were losing an average of $60 per head on cash prices of $110. Feeder cattle represent 71% of the cost of finishing a steer compared to 73% 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 decline $8 per head with profits of $28. Lean carcass prices traded at $73.04 per cwt., $4 per cwt. lower than the previous week. A year ago pork producer margins were negative $40 per head. Pork packers saw average profits of $23 per head, $8 better than the previous week.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $138 per cow. That would be 14% lower compared to the $161 estimated average profit for 2018. Estimated average cow-calf margins were $164 in 2017, $176 in 2016, and $438 per cow in 2015.
For feedyards, Nalivka projects an average profit of $62 per head in 2019, which would be $38 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $155 per head in 2019, about $11 less than in 2018.
For farrow-to-finish pork producers, Nalivka projects an average profit of $13 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $16 per head in 2019, about $4 less than the $20 per head profits of 2018.
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