Profit Tracker: Margins Underwater Again
Greg Henderson, FarmJournal's Pork
September 9, 2020
After a one-week reprieve, cattle feeding margins are back in the red. With average negotiated cash cattle prices $2 lower, average feedyard closeouts showed losses of $42 per head, according to the Sterling Beef Profit Tracker. That’s a $91 per head decline from last week’s average profit of $134.
The previous week’s profits were tied more to the significantly cheaper feeder cattle price of $117 recorded at the peak of the pandemic last spring. Subsequently, this week’s losses are tied to an average feeder cattle price of $135.50 per cwt., a price that added nearly $140 per head to the cost of feeding cattle marketed last week.
A month ago feedyard losses were estimated at $59per head.
Packer saw their margins increase $9 per head to $439, despite a $2 decline in the boxed beef cutout to about $225 per cwt.
Feedyard margins reported by the Sterling Profit Tracker are calculated on a cash basis only with no adjustment for risk management practices.
A year ago cattle feeders saw cash losses of $119 per head on closeouts the first week of September, while packers saw profits of $429. Last year’s Profit Tracker for the first week of September was the third to see the impact of the fire at Tyson’s Finney County, Kan., facility. (Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)
Feeder cattle represent 72% of the cost of finishing a steer compared to 72% a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
Sterling Marketing projects 2020 feedyard margins to average a $1 loss per head, while annual packer profits are projected at $297 per head.
Farrow-to-finish pork producers saw their margins improve $7 per head but continue to lose an average of $18. Lean carcass prices traded at 46.47 per cwt., up $2.16 per cwt. Lean carcass prices are $5.61 higher than a month ago, but $10.24 per cwt. lower than the same week a year ago. A year ago pork producers lost an average of $7 per head.
Pork packers saw average profits of $55...
more, including links to Sterling Beef & Pork Profit Trackers