Profit Tracker: Feeding Margins Near Breakeven

Closeouts are gradually improving. ( FJ )

Cattle feeding margins continue improving. For the week ending Oct. 18, 2019, average closeouts produced a $10 per head loss, $28 per head better than the previous week, and $154 better than a month ago.

The combination of shrinking packer profits and smaller feedyard losses over the past month put the packer/feeder margin spread at $276, down another $12 from the previous week, and $277 less than the margin spread of $553 a month ago, according to the Sterling Beef Profit Tracker.

A year ago cattle feeders lost an average of $43 per head on closeouts the third week in October, while packers saw profits of $178, for a spread of $221.

(Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Feeder cattle represent 72% of the cost of finishing a steer compared to 74% a year ago.

The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins improve $7 per head, putting losses at  $7 per head. Lean carcass prices traded at $60.68 per cwt., $4.49 per cwt. higher than the previous week. A year ago pork producer losses were $1 per head. Pork packers saw average profits of $26 per head, a decrease of $8 from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins cow-calf producers in 2019 will average $124 per cow. That would be 13% lower compared to the $162 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 $33 per head in 2019, which would be $9 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $192 per head in 2019, about $23 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $3 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $16 per head in 2019, about $4 less than the $20 per head profits of 2018.

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Profit Tracker: Packer/Feeder Margin Spread Down 50%