Profit Tracker: Cattle and Pork Margins Show Major Divergence
Profit margins for cattle and hog producers are headed in opposite directions. Feedlot managers are experiencing a spring rally of historic proportions while hog producers are mired in red ink just a year after enjoying good profits.
Cash cattle and wholesale beef prices moved higher for the fourth consecutive week, increasing profit margins for cattle feeders. Average margins were estimated at $387 per head as negotiated cash prices set a new record high price at $182.37, according to the Sterling Beef Profit Tracker.
Beef packers, meanwhile, saw losses of about $2.55 per head. Packer margins a year ago were estimated at $317 per head.Wholesale beef prices improved $9.01 per cwt. to $295.95 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Oregon.
Cattle sold last week carried a total feed cost of $597 per head, which is 16% higher than the $442 feed costs for cattle sold the same week a year ago.
Cattle marketed last week had a breakeven of $154.70 per cwt., while cattle placed on feed last week have a breakeven of $163.52 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $197.59 per cwt., and feed costs of $564 per head. The feeder steer price is 19% higher than last year.
The estimated total cost for finishing a steer last week was $2,165 per head, up 18% from last year’s estimate of $1,778 per head.
Fed cattle slaughter totaled an estimated 480,592 head, about 7,800 head more than the previous week and 18,000 head fewer than the same week last year. Packing plant capacity utilization was estimated at 83.9% compared to 87.0% last year.
Farrow-to-finish hog producers saw losses of $25 per head last week, about $1 per head more than the previous week. Pork producers saw profit of $65 per head the same week a year ago. Lean carcass prices averaged $73.81 per cwt., a decline of $3.64 per cwt. from the previous week.
Pork packers found margins at about breakeven for the second consecutive week. Last year pork packers saw profits of about $2 per head. Hog slaughter was estimated at 2.438 million head, up 68,000 head from the previous week and up 93,000 head from last year.
Pork packer capacity utilization was estimated at 89.8% compared to 85.0% 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.)
