Profit Tracker: Packers Play Coy
Packers resisted paying higher money last week right up to happy hour on Friday. The feet-dragging suggested their profit margins would look bleak when the dust settled. Not so, according to the Sterling Beef Profit Tracker. Their margins dropped, but nowhere near the bleak threshold.
Cash fed cattle prices leaped $7 per cwt higher last week, adding $63 to feedyard margins, with a weekly average of $80 per head. Packer margins declined about $15 per head, but left them with per head profits of $143. Last week’s beef cutout price was $199.65, up $2 from the previous week. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
Break even prices for steers sold last week averaged $112.27.68 per cwt., up about $2.50 from the previous week. However, cattle placed on feed last week have a projected breakeven of $113.88 per cwt.
The cost of finishing a steer last week was calculated at $1,563 per head, which is $15 less than the $1,578 a year ago. A month ago cattle feeders were losing $13 per head, while a year ago losses were calculated at $195 per head. Feeder cattle represent 74% of the cost of finishing a steer, compared to 74% last year.
Farrow-to-finish pork producers earned an average of $18 per head last week, with lean carcass prices at $67.28, nearly $3 higher than the previous week. A year ago pork producers lost an average of $35 per head. Pork packer margins totaled $11 per head last week, about $2 per head lower than the previous week.
Cash prices for fed cattle are $19 higher than the same week a year ago. Lean hog prices are about $20 per cwt. higher than last year.
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 $210 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 $15 per head, compared to $5 per head last year. Pork packers are projected to earn $26 per head in 2017, up slightly from $24 profit per head in 2016.
