Profit Tracker: Packer Profits Exceed $200

5/17/18 Packers, Feedyards See Profits
Packer margins advanced on softer cash cattle prices and gain in the beef cutout prices. ( Wyatt Bechtel )

Beef packers are enjoying excellent profits this spring. Last week’s combination of lower cash cattle prices and higher beef cutout values pushed packer margins to $214 per head, or $32 better than the previous week. Feedyard margins slipped $15 per head to $92, according to the Sterling Beef Profit Tracker.

Cash cattle prices declined $3.61 per cwt, with the 5-area average at $121.21. The cost of finishing a steer last week was calculated at $1,594, which is $222 higher than the $1,372 a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A month ago cattle feeders were losing $43 per head, while a year ago profits were calculated at $524 per head. Feeder cattle represent 74% of the cost of finishing a steer compared with 73% a year ago.

Farrow-to-finish pork producers saw their margins improve $3.50 to a $9 per head profit. Lean carcass prices traded at $62.80 per cwt., a $1.82 per cwt. improvement from the previous week. A year ago pork producers earned an average of $26 per head. Pork packer margins gained $2 per head to $11.

Cash prices for fed cattle are $15 per cwt. lower than the same week a year ago. Lean hog prices are about $9 per cwt. lower than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 will average $115 per cow. That would be $43 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 $118 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 $1.25 per head, compared to profits of $21 in 2017. Pork packers are projected to earn $18 per head in 2018, down from $25 profit per head in 2017.