Profit Tracker: Margins Reflect Spring Feeder Cattle Prices

Cattle and hog finishing ( FJ )

Despite a $2 decline in cash fed cattle prices last week, average feedyard closeouts showed a $5 per head profit, roughly $47 per head better than the week before. The improvement was due to significantly lower feeder cattle prices for animals placed in April against last week’s marketings, according to the Sterling Beef Profit Tracker.

Additionally, all costs associated with the Profit Tracker for the first full week in September were nearly identical to those from the same week a year ago – except for the price of feeder cattle. The Profit Tracker from the first week in September of 2019 saw fed cattle prices at $100.70, compared to $101.09 this year. Feedyard closeouts last year were $203 in the red. The difference between this year’s margins and last year’s is the near-$200 per head difference in the cost of April-bought feeder cattle.

Packer margins saw a modest dip last week of $16 per head, but their profit margins remain huge at $428 per head.

Feedyard margins reported by the Sterling Profit Tracker, by Sterling Marketing, Vale, Ore., are calculated on a cash basis only with no adjustment for risk management practices.

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

Sterling Marketing projects 2020 feedyard margins to average a $1 loss per head, while annual packer profits are projected at $338 per head.

Farrow-to-finish pork producers have seen their margins steadily improve over the past month with rising lean carcass prices.  Last week saw average losses of $2 per head, about $5 better than the week before, and $34 per head better than a month ago.

Lean hog carcass prices traded at $54.12 per cwt., $7.65 per cwt. higher than the previous week, and 46.47 per cwt., up $2.16 per cwt. Lean carcass prices are $5.61 higher than a month ago, and $4.39 higher than the same week a year ago. A year ago pork producers lost an average of $21 per head.

Pork packers saw average profits of $48 per head last week, about $7 per head less than the previous week.

Sterling Marketing projects 2020 annual per head losses for pork producers at $34 per head, while projected packer profits are $52 per head.

(Editor’s note: Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

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