Profit Tracker: Post-Holiday Rally
This spring’s better-than-expected market continues to perform better-than-expected. Cash fed cattle rallied $4 to $6 per cwt last week, boosting feedyard margins to near $500 per head. It was an increase of $63 per head over the previous week, and $226 per head better than a year ago, according to the Sterling Beef Profit Tracker. Feedyards were profitable for the 28th consecutive week.
Meanwhile, packers barely noticed the fact they paid on average $65 more per head to procure cattle last week. Their operating margins slipped just $8 per head, leaving a tidy profit of $208 per head for their trouble. The beef cutout declined $1.36 to $239.90 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.
The cost of finishing a steer last week was calculated at $1,395 per head, which is $127 less than the $1,522 a year ago. A month ago cattle feeders were earning $536 per head, while a year ago profits were calculated at $272 per head. Feeder cattle represent 73% of the cost of finishing a steer, compared to 75% last year.
Farrow-to-finish pork producers earned $28 profit per hog last week, steady with the previous week. A month ago farrow-to-finish pork producers showed a profit of $13 per head.
Pork packers saw their margins decrease $2 $28 per head. Negotiated prices for lean hogs were $75.67 per cwt last week, $2 per cwt higher. Cash prices for fed cattle are $7 per cwt. higher than last year and prices for lean hogs are about $1 per cwt. lower.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $111 per cow. That would be $66 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 $260 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $105 per head in 2017, down from $114 in 2016.
