Profit Tracker: Margins Decline $28 Per Head

Cash fed cattle prices declined more than $4 per cwt. last week, fueling a $28 per head decline in cattle feeding margins. The cost of feeder cattle calculated against last week’s marketings declined $3 per cwt., softening the hit from weaker fed cattle prices, according to the Sterling Beef Profit Tracker.

Beef packer margins improved an average of $5 per head to $93. The beef cutout declined $3 per cwt. to $206.53. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Break even prices for steers sold last week averaged $117.02 per cwt., about $2 per cwt. lower than the previous week. Cattle placed on feed last week have a projected breakeven of $114.09 per cwt.

The cost of finishing a steer last week was calculated at $1,628 per head, which is $66 more than the $1,562 a year ago. A month ago cattle feeders were earning $80 per head, while a year ago losses were calculated at $117 per head. Feeder cattle represent 75% of the cost of finishing a steer, compared to 72% last year.

Farrow-to-finish pork producers were at breakeven last week, a decline of $4 per head from the previous week. Lean carcass prices at $60.47, nearly $2 lower than the previous week. A year ago pork producers lost an average of $37 per head. Pork packer margins totaled $35 per head last week, about $3 per head higher than the previous week.

Cash prices for fed cattle are $15 higher than the same week a year ago. Lean hog prices are about $17 per cwt. higher than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $136 per cow. That would be $46 per head less than the estimated average profit of $177 for 2016. Estimated average cow-calf margins were $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $228 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $118 per head in 2017, up from $114 in 2016.

For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $20 per head, compared to $5 per head last year. Pork packers are projected to earn $24 per head in 2017, up slightly from $24 profit per head in 2016.