Profit Tracker: Beef, Pork Packer Margins Squeezed
Shifting market leverage toward producers has continuously chipped away at the historic packer margins recorded last year. The final full processing week ahead of Thanksgiving found margins for both beef and pork processors in the single digits.
Cattle feeders saw average profits of $124 per head the week ending Nov. 19 as the 5-area direst cash price was mostly steady at $153.63 per cwt., according to the Sterling Beef Profit Tracker. Those average margins were down $98 per head from the previous week but $33 per head higher than a year ago.
Estimated beef packer margins, meanwhile, were $7 per head, down $59 per head from the previous week and down $540 per head from last year. Last week’s Choice beef cutout averaged $253.09 per cwt., down $5.87 prom the week prior, and down $24.09 from a year ago.
Costs associated with finishing cattle have increased dramatically since April. The cattle sold last week carried a total feed cost of $625 per head, which is 14% higher than the $543 feed costs for cattle sold the same week a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Oregon.
Cattle marketed last week had a breakeven of $144.76 per cwt., while cattle placed on feed last week have a breakeven of $151.63 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $174.62 per cwt., and feed costs of $590 per head. The feeder steer price is 13% higher than last year.
The estimated total cost for finishing a steer last week was $2,026 per head, up 13% from last year’s estimate of $1,772 per head.
Cattle slaughter totaled an estimated 674,000 head, about 5,000 head fewer than the same week last year. Packing plant capacity utilization was estimated at 90.3% compared to 89.9% the previous week and 92.3% last year.
Farrow-to-finish hog producers found profits of $2 per head last week, down about $3 per head from the previous week, and up $39 per head compared to last year’s $41 per head losses. Lean carcass prices averaged $87.73 per cwt., down $1.23 per cwt. from the previous week but up $29.08 from last year (33%).
Pork packers saw profits of about $7 per head, or $1 per head less than the previous week and $49 lower than the same week a year ago. Hog slaughter was estimated at 2.605 million head, up 113,000 head from the previous week and down 27,000 head from last year.
Pork packer capacity utilization was estimated at 96.9% compared to 92.75.8% the previous week and 97.9% last year.
(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices. The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs. Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)
