Feedyard Margins Improve $100 Per Head

Last week's fed cattle rally improved cattle feeding margins $100 per head. ( Wyatt Bechtel )

A $6 per cwt rally in last week’s cash fed cattle market improved cattle feeding margins $100 per head, lifting average profits to $8 per head. Packer margins fell $50 per head to an average of $251, according to the Sterling Beef Profit Tracker.

Cash prices for fed cattle averaged $112.66, and the beef cutout declined $4.75 per cwt, closing at $207.72. The cost of finishing a steer last week was calculated at $1,560, which is $190 higher than the $1,370 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning $267 per head. Feeder cattle represent 73% of the cost of finishing a steer compared with 71% a year ago.

Farrow-to-finish pork producers saw their margins decline $1 to $36 per head. Lean carcass prices traded at $80.12 per cwt., an $0.84 per cwt. gain from the previous week. A year ago pork producers earned an average of $64 per head. Pork packer margins averaged a profit of $4 per head last week.

Cash prices for fed cattle are $5 per cwt. lower than the same week a year ago. Lean hog prices are about $9 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.