Profit Tracker: Charging Higher
The two-week rally in fed cattle prices has added more than $150 per head to profit margins. Feeding margins the week ended Oct. 20 sat at $16 per head. Since then, a $14 upswing in cash cattle prices pushed feeding margins to $168 for the week ended Nov. 4.
Last week, cash cattle prices jumped $6 per cwt higher, closing at $124.35 and boosting cattle feeding returns $88 for the week, according to the Sterling Beef Profit Tracker. Meanwhile, packer margins have declined, but they remain in a strong position headed into the holidays. For the week ended Nov 4, packer margins declined an average of $52 and stood at $93 per head.
Last week’s beef cutout closed at $204.84 per cwt., up about $5 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 $112.19 per cwt., about steady with the previous week. However, cattle placed on feed last week have a projected breakeven of $118.26 per cwt.
The cost of finishing a steer last week was calculated at $1,562 per head, which is $54 more than the $1,506 a year ago. A month ago cattle feeders were earning $10 per head, while a year ago losses were calculated at $52 per head. Feeder cattle represent 74% of the cost of finishing a steer, compared to 72% last year.
Farrow-to-finish pork producers earned an average of $17 per head last week, with lean carcass prices at $66, more than $1 lower than the previous week. A year ago pork producers lost an average of $35 per head. Pork packer margins totaled $18 per head last week, about $7 per head higher than the previous week.
Cash prices for fed cattle are $20 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 $136 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 $228 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $118 per head in 2017, up from $114 in 2016.
For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $20 per head, compared to $5 per head last year. Pork packers are projected to earn $24 per head in 2017, up slightly from $24 profit per head in 2016.
