Feeding Margins Remain In The Red

Feedyard closeouts continue flowing red ink while packer margins hover around $300 per head. ( Wyatt Bechtel )

Cattle feeders have now experienced a month’s worth of losses, while packer margins hover at the $300 per head level. Feedyard closeouts revealed a $17 loss on every animal sold last week, a $33 per head improvement over the previous week, according to the Sterling Beef Profit Tracker.

Cash prices for fed cattle declined $2 per cwt last week, and the beef cutout declined $4 per cwt, closing at $215.59. The cost of finishing a steer last week was calculated at $1,531, which is $116 higher than the $1,415 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning $273 per head. Feeder cattle represent 73% of the cost of finishing a steer compared with 72% a year ago.

Farrow-to-finish pork producers saw their margins decline $1 to $47 per head. Lean carcass prices traded at $84.05 per cwt., a $0.78 per cwt. improvement from the previous week. A year ago pork producers earned an average of $61 per head. Pork packer margins averaged a loss of $6 per head last week.

Cash prices for fed cattle are $12 per cwt. lower than the same week a year ago. Lean hog prices are about $5 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $128 per cow. That would be $30 per head less than the estimated average profit of $158 for 2017. Estimated average cow-calf margins were $173 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $51 per head in 2018, which would be $185 less than the average of $236 per head in 2017. Nalivka expects packer margins to average about $147 per head in 2018, up from $120 in 2017.

For farrow-to-finish pork producers, Nalivka projects 2018 profit margins will average a loss of $1.72 per head, compared to profits of $21 in 2017. Pork packers are projected to earn $13 per head in 2018, down from $25 profit per head in 2017.