Profit Tracker: Packer-Feeder Margin Spread Nears $600
The spread between cattle feeding margins and beef packer margins continues to widen, last week reaching $582 per head, in favor of the cattle feeder. That’s according to the Sterling Beef Profit Tracker which calculates weekly industry beef and pork margins. The current beef margin spread represents a dramatic 180-degree reversal since the excessive packer profits of two years ago.
For the week ending August 5, average cattle feeding margins were $482 per head, a $39 per head increase from the previous week. Meanwhile, packers lost an average of $99 per head, about a $3 per head improvement from the previous week.
Cash cattle prices posted roughly a $2 per cwt. gain last week to average $187.63 per cwt. That price is 25% higher than last year’s $141.32 per cwt. cash price.
Wholesale beef prices posted an average of $299 per cwt., about steady with 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 $553 per head, down about $25 per head from the previous week, but 7% higher than the $514 feed costs for cattle sold the same week a year ago.
Cattle marketed last week had a breakeven of $153.17 per cwt., while cattle placed on feed last week have a breakeven of $181.73 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $244.71 per cwt., and feed costs of $435 per head. The feeder steer price is 30% higher than last year.
The estimated total cost for finishing a steer last week was $2,144 per head, up 14% from last year’s estimate of $1,841 per head.
Fed cattle slaughter totaled an estimated 476,914, down 4,668 head from the previous week and 29,000 fewer than the same week last year. Packing plant capacity utilization was estimated at 83.4% compared to 88.5% last year.
Farrow-to-finish hog producers saw profits of about $41 per head last week, about $9 per head less than the previous week. Pork producers saw profits of $92 per head the same week a year ago. Lean carcass prices averaged $104.37 per cwt., down $2.96 per cwt. from the previous week.
Pork packers closed the week with $12 per head profits, up $7 per head from the previous week. Last year pork packers were losing about $14 per head. Hog slaughter was estimated at 2.338 million head, down 54,000 head from the week before and up 3,000 head from last year.
Pork packer capacity utilization was estimated at 85.7% compared to 84.5% 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.)
