Profit Tracker: Cattle Margins Shrink, Hogs Gain
Market hogs sold last week earned an average profit margins nearly four times that of fed steers. That’s mainly due to a rally that has added more than $20 per cwt. to lean hog carcass prices over the past month, while cash cattle prices have been stuck in neutral.
Margins for cattle sold last week average $15 per head, a decline of $10 from the previous week, but significantly better that the $90 per head losses recorded the second week of March last year, according to the Sterling Beef Profit Tracker. Cash fed cattle prices averaged $113.55 per cwt., steady with the previous week.
Average closeouts saw total costs for finishing a steer about $12 per head higher than the previous week at $1,529, including about $9 more per head for feed and $3 more for feeder cattle.
Packer margins declined $46 per head to an average of $324. The result was a packer/feeder margin spread of $309 per head, down $37 from the previous week’s $370.
Beef packer capacity utilization was estimated at 89.7%, down 2.5% from the previous week, with an estimated 647,000 head slaughtered. A year ago packer capacity was estimated at 86.9% with a weekly kill of 631,261 head. Carcass weights this year are running 7 pounds heavier at 838 pounds.
Beef packer margins declined based on a $$6 per cwt. decline in the beef cutout to $227.21. A year ago the cutout averaged $206.25. A year ago packer profits were $120 per head. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
Farrow-to-finish pork producers saw their margins gain $6 per head with positive margins for the sixth consecutive week and total profits of $54 per head. Lean carcass prices traded at $89.43 per cwt., an increase of $3.31 from the previous week, and $20 per cwt. higher than a month ago. A year ago pork producers lost an average of $6 per head.
Pork packer margins averaged a profit of $8 per head, up $2 per head from the previous week and $7 per head lower than last year. Pork packer capacity utilization was estimated at 91.9% compared to 95% a year ago.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2021 will average $125 per cow. For feedyards, Nalivka projects an average profit of $1 per head in 2021, and packer margins are projected to average $304 per head.
For farrow-to-finish pork producers, Nalivka projects 2021 will produces losses of $12 per head. Pork packers are projected to earn $49 per head in 2021.