Packer, Feedlot Margins Post Declines

While cash cattle prices slipped only modestly, cattle feeders saw margins erode by $86 per head, falling from an average profit of $38 two weeks ago to an average loss of $49 per head last week. Cash cattle traded at $111, steady with the previous week, and packer margins declined $33 per head to $173, according to the Sterling Beef Profit Tracker.              

The beef cutout declined $0.50 per cwt., closing at $203.35. The cost of finishing a steer last week was calculated at $1,569, which is $92 higher than the $1,477 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were turning a slight profit of $10 per head. Feeder cattle represent 73% of the cost of finishing a steer compared with 74% a year ago.

Farrow-to-finish pork producers saw their margins improve $19 per head to a negative $11 per head. Lean carcass prices traded at $58.79 per cwt., $8.68 per cwt. higher than the previous week, and $17.95 higher than a month ago. A year ago pork producers lost an average of $14 per head. Pork packer margins averaged a profit of $31 per head last week.

Cash prices for fed cattle are $2 per cwt. higher than the same week last year. Lean hog prices are about $6 per cwt. higher than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $146 per cow. That would be $12 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 $31 per head in 2018, which would be $150 less than the average of $181 per head in 2017. Nalivka expects packer margins to average about $159 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 $5 per head in 2018, compared to profits of $21 in 2017. Pork packers are projected to earn $21 per head in 2018, down from $25 profit per head in 2017.