Profit Tracker: Cattle Margins Narrow, Pork in the Red

Cattle feeding margins narrowed significantly last week while pork producer margins remain mired in red ink the first weeks of the new year. Cattle placed on feed last week project to have the highest breakeven price since July of 2015 at $154 per cwt.

Market-ready steers sold the week ending Jan. 14 produced average profits of $58 per head, according to the Sterling Beef Profit Tracker. Meanwhile, beef packers saw average profits of $150 per head. Last year beef packers saw average profits of $442 per head.

The 5-area price for fed cattle closed down about $1 last week at $157.27 per cwt. while the beef cutout declined $1.92 per cwt. for the week, closing at $278.12 per cwt.

Costs associated with finishing cattle have increased dramatically since April. Cattle sold last week carried a total feed cost of $563 per head, which is 19% higher than the $458 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 $153.14 per cwt., while cattle placed on feed last week have a breakeven of $153.69 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $181.73 per cwt., and feed costs of $5673 per head. The feeder steer price is 14% higher than last year.

The estimated total cost for finishing a steer last week was $2,143 per head, up 15% from last year’s estimate of $1,811 per head.

Fed cattle slaughter totaled an estimated 510,292 head, about 76,000 head more than the previous week and 38,000 head more than the same week last year. Packing plant capacity utilization was estimated at 89.0% compared to 82.4% last year.

Farrow-to-finish hog producers saw losses of $24 per head last week, about steady losses the previous week. Pork producers saw positive margins of about $2 per head the same week a year ago. Lean carcass prices averaged $75.60 per cwt., down $1.58 per cwt. from the previous week and up $3.74 from last year (5%).

Pork packers saw profits of about $5 per head, or $5 per head less than the previous week. Last year pork packers saw profits of $25 per head. Hog slaughter was estimated at 2.668 million head, up 372,000 head from the previous week and up 302,000 head from last year.

Pork packer capacity utilization was estimated at 98.7% compared to 88.1% 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.)