Profit Tracker: Packer Margins Erode as Feeders Tread Water
Cash cattle prices saw an average $3.50 per cwt. gain last week which improved closeouts by $48 per head, leaving per head losses at $6. Beef packers saw their margins decline $49 per head, creating a $70 per head per head loss, according to the Sterling Beef Profit Tracker.
Cash cattle averaged $181 per cwt. last week while wholesale beef prices declined $1 per cwt. to $293.13 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.
Cattle sold last week carried a total feed cost of $398 per head, down about $25 per head from the previous week, and about $202 less than feed costs for cattle sold the same week a year ago.
Cattle marketed last week had a breakeven of $181.46 per cwt., while cattle placed on feed last week have a breakeven of $172.23 per cwt., which is about $12 per cwt. higher than a month ago. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $239.89 per cwt., or $22 per cwt. more than a month ago. The feeder steer price is 24% higher than last year.
The estimated total cost for finishing a steer last week was $2,540 per head, up 14% from last year’s estimate of $2,153 per head.
Fed cattle slaughter totaled an estimated 503,820, down 12,000 head from the same week last year. Packing plant capacity utilization was estimated at 86.0% compared to 83.4% last year.
Farrow-to-finish hog producers saw losses of $10 per head last week, about $4 less than losses the previous week. Pork producer margins have been negative every week for more than a year. Lean carcass prices averaged $66.25 per cwt., $1.77 per cwt. higher than the previous week and down $12.96 from last year (-16%).
Pork packers saw profits of about $32 per head, or $8 per head less than the previous week. Last year pork packers saw losses of $6 per head. Hog slaughter was estimated at 2.622 million head, down 70,000 head from the previous week and up 148,000 head from last year.
Pork packer capacity utilization was estimated at 96.9% compared to 89.6% 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.)