Profit Tracker: Cattle Squeeze Continues, Hog Margins Near Orbit
Cattle prices held steady last week at $119 in all regions, but packer margins continue climbing in the greatest squeeze on cattlemen in memory without the influence of a specific black swan event.
Last week’s Sterling Beef Profit Tracker calculated modest average feedyard margins of $87 per head. Packer margins climbed to $929 per head as the Choice beef cutout surpassed $301 per cwt.
Average feedyard closeouts saw total costs for finishing a steer about $26 per head higher than the previous week at $1,569, most of that due to higher grain prices factored into the analysis. Total finishing costs were $28 per head lower than last year.
Packer margins gained $261 per head to an average of $929. Beef packer capacity utilization was estimated at 88.6%, down 1.5% from the previous week, with an estimated 638,000 head slaughtered. A year ago packer capacity was estimated at 62.4% with a weekly kill of 475,683 head. Carcass weights this year are running 8 pounds heavier at 828 pounds.
Farrow-to-finish pork producers saw their margins gain $6 per head with positive margins for the 12th consecutive week and total profits of $112 per head. Hog profit margins have increased $32 per head over the past month.
Lean carcass prices traded at $121.72 per cwt., an increase $4.68 per cwt. from the previous week, and $20 per cwt. higher than a month ago. A year ago pork producers lost an average of $43 per hog.
Pork packers lost an average of $29 per head, compared to losses of $25 per head the previous week. Pork packer capacity utilization was estimated at 85.6% compared to 63.2% 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 $41 per head in 2021, and packer margins are projected to average $365 per head.
For farrow-to-finish pork producers, Nalivka projects 2021 will produces profits of $35 per head. Pork packers are projected to earn $23 per head in 2021.
