Profit Tracker: Packers Stick Their Toes in Red Ink

As cash cattle prices have been on an upward trajectory in 2023, packer margins have correspondingly moved lower. The week ending April 1 saw average per head packer margins printed in red for the first time since September 2017.

Average cattle feeding margins reached $258 per head last week, up $63 from the previous week. Beef packer margins printed at a $2 per head loss, a decline of $36 per head from the previous week, according to the Sterling Beef Profit Tracker.

Packer losses were the result of a $5 rally to cash cattle prices, closing at $169.91 per cwt., and near steady wholesale beef prices. The beef cutout closed at $279.22 per cwt.

Cattle sold last week carried a total feed cost of $599 per head, which is 28% higher than the $432 feed costs for cattle sold the same week a year ago.

Cattle marketed last week had a breakeven of $151.45 per cwt., while cattle placed on feed last week have a breakeven of $159.42 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $191 per cwt., and feed costs of $560 per head. The feeder steer price is 17% higher than last year.

The estimated total cost for finishing a steer last week was $2,120 per head, up 17% from last year’s estimate of $1,753 per head.

Fed cattle slaughter totaled an estimated 510,384 head, about 20,000 head more than the previous week and 18,000 head more than the same week last year. Packing plant capacity utilization was estimated at 89.1% compared to 85.9% last year.

Farrow-to-finish hog producers saw losses of $15 per head last week, about $4 more than the previous week. Pork producers saw profits of $72 per head the same week a year ago. Lean carcass prices averaged $77.45 per cwt., down $1.99 with the previous week.

Pork packers found losses of about $4 per head, about $1 more than the previous week. Last year pork packers saw losses of about $15 per head. Hog slaughter was estimated at 2.497 million head, up 40,000 head from the previous week and up 58,000 head from last year.

Pork packer capacity utilization was estimated at 92.0% compared to 88.2% 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.)