Spread Grows Between Packer and Feeder Margins

Cattle feeders saw average losses exceed triple digits last week. ( FJ )

Beef packers continued with a stranglehold on cattle markets, buying a few cattle for their needs at an industry-average $102 per cwt. That left cattle feeders losing an average of $118 on every animal sold, and packers cashing in at a hefty $430 per head. That put the spread between feeder losses and packer profits at $548 per head.

Cattle feeding margins added $63 to the previous week’s losses of $55 for total per head losses of $118, according to the Sterling Beef Profit Tracker.

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

A year ago cattle feeders were losing an average of $1 per head on cash prices of $108. Feeder cattle represent 72% of the cost of finishing a steer compared to 71% 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 decline $13 per head with average losses now at $7 per head. Lean carcass prices traded at $56.71 per cwt., $5.40 per cwt. lower than the previous week. A year ago pork producer margins were negative $49 per head. Pork packers saw average profits of $25 per head, $10 more than the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $124 per cow. That would be 24% lower 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 $46 per head in 2019, which would be $22 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $192 per head in 2019, about $22 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $6 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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