Profit Tracker: Beef Packer Losses Hit Triple Digits

Beef and pork producers saw solid profits last week.
Beef and pork producers saw solid profits last week.
(FJ)

Cattle slaughter continues declining as packers are loathe to bid aggressively as their margins remain underwater. Feedyards have mostly held firm to asking prices and the result has been a sideways market for a month.

For the week ending July 29, cattle feeders found average profits near $443 per head, about steady with profits the previous week. The week’s 5-area direct price was $185.69 per cwt., a decline of $1.37 per cwt., and an increase of $2.90 per cwt., which is $43 per cwt. higher (+24%) than the same week a year ago, according to the Sterling Beef Profit Tracker.

Beef packer margins slipped further into the red with average losses of about $102 per head, or losses of $21 per head more than the previous week. Wholesale beef prices posted an average of $299 per cwt., down about $1 from the previous week. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.

Cattle sold last week carried a total feed cost of $578 per head, down about $2 per head from the previous week, but 12% higher than the $512 feed costs for cattle sold the same week a year ago.

Cattle marketed last week had a breakeven of $154.05 per cwt., while cattle placed on feed last week have a breakeven of $185.53 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $248.75 per cwt., and feed costs of $457 per head. The feeder steer price is 32% higher than last year.

The estimated total cost for finishing a steer last week was $2,156 per head, up 12% from last year’s estimate of $1,895 per head.

Fed cattle slaughter totaled an estimated 487,722, down about 4,000 head from the previous week and 30,000 fewer than the same week last year. Packing plant capacity utilization was estimated at 85.3% compared to 90.6% last year.

Farrow-to-finish hog producers saw profits of about $50 per head last week, about $5 per head more than the previous week. Pork producers saw profits of $83 per head the same week a year ago. Lean carcass prices averaged $107.33 per cwt., up $1.20 per cwt. from the previous week.

Pork packers closed the week with $5 per head profits, down $1 per head from the previous week. Last year pork packers were losing about $8 per head. Hog slaughter was estimated at 2.392 million head, up 76,000 head from the week before and up 101,000 head from last year.

Pork packer capacity utilization was estimated at 88.0% compared to 82.8% 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.)

 

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