Profit Tracker: Margins Near Breakeven, Packers Up
Average feedyard margins declined $18 per head last week, settling at $26. With average margins that close to breakeven, many cattle sold last week undoubtedly lost money. Beef packers, already with strong margins, saw their profits increase $6 per head to $160. Based on industry average prices and costs, the Sterling Beef Profit Tracker was positive for feedyard closeouts for the 46th consecutive week.
Last week’s 5-area direct cash fed cattle price was $108.05, down 40 cents from the previous week, while the beef cutout price was $194.95, up $3.52 per cwt.
Break even prices for steers sold last week averaged $106.14 per cwt., $0.85 higher than the previous week. However, cattle placed on feed last week have a projected breakeven of $112.95 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
The cost of finishing a steer last week was calculated at $1,478 per head, which is $47 less than the $1,525 a year ago. A month ago cattle feeders were earning $35 per head, while a year ago losses were calculated at $30 per head. Feeder cattle represent 73% of the cost of finishing a steer, compared to 74% last year.
Farrow-to-finish pork producers lost an average of $19 per hog last week, $5 per head more than the previous week. A month ago farrow-to-finish pork producers showed a profit of $15 per head.
Pork packers saw their margins steady at $40 per head. Negotiated prices for lean hogs were $49.79 per cwt., a $2.85 decline. Cash prices for fed cattle are $1 higher than the same week a year ago, and prices for lean hogs are about $2 per cwt. lower.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $131 per cow. That would be $46 per head less than the estimated average profit of $177 for 2016. Estimated average cow-calf margins were $438 per cow in 2015.
For feedyards, Nalivka projects an average profit of $197 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $120 per head in 2017, up from $114 in 2016.
For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $25 per head, compared to $5 per head last year. Pork packers are projected to earn $23 per head in 2017, down slightly from $24 profit per head in 2016.
