Profit Tracker: Break Evens Drop Below $100 per CWT
Despite a $1 per cwt. decline in fed cattle prices, feedyard profits increased $37 per head on a cash basis last week to total $279. That’s because break even prices on cattle marketed fell more than $3 per cwt. to an average of $97.43, according to the Sterling Beef Profit Tracker. Lower break evens were the result of a $6 per cwt decline in the average cost of feeder steers placed on feed. Feedyards were profitable for the 32nd consecutive week.
Last week’s beef cutout price dropped $9 per cwt., to $218, which resulted in a $45 per head decline in beef packer margins to $239 per head. 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 $1,357 per head, which is $233 less than the $1,590 a year ago. A month ago cattle feeders were earning $401 per head, while a year ago profits were calculated at $80 per head. Feeder cattle represent 72% of the cost of finishing a steer, compared to 74% last year.
Farrow-to-finish pork producers earned $64 profit per hog last week, a $1 per head increase from the previous week. A month ago farrow-to-finish pork producers showed a profit of $45 per head.
Pork packers saw their margins increase $2 per head to $26. Negotiated prices for lean hogs were $89.70 per cwt last week. Cash prices for fed cattle are $2 per cwt. lower than last year and prices for lean hogs are about $9 per cwt. higher.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $112 per cow. That would be $65 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.
For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $19 per head, compared to $5 per head last year. Pork packers are projected to earn $22 per head in 2017, down slightly from $24 profit per head in 2016.
