Profit Tracker: Feeders Seek Leverage

Feedyard closeouts saw modest improvement last week, but cattle feeders remain frustrated by their inability to push the cash market higher. ( Wyatt Bechtel )

Cattle feeding margins improved with last week’s steady cash prices, but feedyards remain frustrated by their inability to push the market higher. Although feedyards are considered current, their market leverage remains hampered by an adequate – if not plentiful – supply of market-ready cattle.

Profit margins on cattle sold last week improved a modest $3 per head to $121, while packer margins drifted $12 per head lower to $84, according to the Sterling Beef Profit Tracker.

For the week ending Feb. 15, cash cattle sold for an average of $125 per cwt., steady with the previous week, while the beef cutout closed the week at $216, also steady. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning an average of $223 per head. Feeder cattle represent 71% of the cost of finishing a steer compared with 72% a year ago.

Farrow-to-finish pork producers saw their margins decline $4 per head, with losses at $17. Lean carcass prices traded at $50.18 per cwt., $1.40 per cwt. lower than the previous week, and $3.73 lower than a month ago. A year ago pork producer margins were a positive $26 per head. Pork packer margins averaged a profit of $24 per head last week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $161 per cow. That would be steady compared to the $161 estimated average profit for 2018. Estimated average cow-calf margins were $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $53 per head in 2019, which would be $29 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $150 per head in 2019, about $20 less than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average loss of $4.75 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $17 per head in 2019, about $3 less than the $20 per head profits of 2018.

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