Profit Tracker: Margins Continue Improving, Packers Slip

Cattle feeding profits improved for the third consecutive week as cash fed cattle prices gained $1 per cwt. ( Wyatt Bechtel )

Cattle feeding margins improved for the third consecutive week, boosted by a $1 improvement in fed cattle prices. Closeouts posted an average profit of $54 per head last week, $16 better than the week before, according to the Sterling Beef Profit Tracker, Packer margins dipped $31 per head to an average profit of $168 per head. Fed cattle prices improved to $117.64 per cwt.

The beef cutout was slightly lower at $211.10. The cost of finishing a steer last week was calculated at $1,559, which is $29 lower than the $1,588 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning an average of $66 per head. Feeder cattle represent 72% of the cost of finishing a steer compared with 74% a year ago.

Farrow-to-finish pork producers saw their margins slip $6  to average losses of $19 per head. Lean carcass prices traded at $51.19 per cwt., $1.97 per cwt. lower than the previous week, and $9.26 lower than a month ago. A year ago pork producers were earning about $3 per head. Pork packer margins averaged a profit of $27 per head last week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $165 per cow. That would be steady compared to the $164 estimated average profit for 2017. Estimated average cow-calf margins were $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $22 per head in 2018, which would be $159 less than the average of $181 per head in 2017. Nalivka expects packer margins to average about $165 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 $3 per head in 2018, compared to profits of $21 in 2017. Pork packers are projected to earn $19 per head in 2018, down from $25 profit per head in 2017.