Packer Windfall Continues

The $4-plus rally in cash fed cattle prices pulled feedyards out of the red, and packer margins remain at historic levels. ( Wyatt Bechtel )

Packer profits slipped $37 per head lower last week, yet margins remain in historic territory at $331. Cash fed cattle prices rallied $4-plus per cwt., pulling closeouts out of the red and up to an $18 per head profit, according to the Sterling Beef Profit Tracker.

Cash cattle prices closed at $144.66 last week, with the beef cutout at $222.73 per cwt. The cost of finishing a steer last week was calculated at $1,578, which is $163 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 $478 per head. Feeder cattle represent 74% of the cost of finishing a steer compared with 72% a year ago.

Farrow-to-finish pork producers saw their margins improve $13 to a $34 per head. Lean carcass prices traded at $76.02 per cwt., a $6 per cwt. improvement from the previous week. A year ago pork producers earned an average of $40 per head. Pork packer margins slipped $9 to a loss of $3 per head.

Cash prices for fed cattle are $21 per cwt. lower than the same week a year ago. Lean hog prices are about $3 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.

 
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