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Profit Tracker: Packer, Feeder Margins Decline

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Both feedyards and beef packers saw their margins decline last week, though the disparity in the two remains wide. Feedyard closeouts showed an average profit of $25 per, down about $10, while beef packers earned $180 per head on every animal processed, a decline of about $15 per head. Positive average feedyard margins were recorded for the 44th consecutive week, according to the Sterling Beef Profit Tracker.

The 5-area direct cash fed cattle price was $105.92, about $0.88 per cwt. higher, while the beef cutout price was $190.64, down about $1.40 per cwt.

Break even prices for steers sold last week averaged $104.15 per cwt., $1.65 higher than the previous week. However, cattle placed on feed last week have a projected breakeven of $113.91 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

The cost of finishing a steer last week was calculated at $1,450 per head, which is $167 less than the $1,617 a year ago. A month ago cattle feeders were earning $83 per head, while a year ago losses were calculated at $153 per head. Feeder cattle represent 73% of the cost of finishing a steer, compared to 75% last year.

Farrow-to-finish pork producers lost an average of $4 per hog last week, a $12 per head decrease from the previous week. A month ago farrow-to-finish pork producers showed a profit of $43 per head.

Pork packers saw their margins increase $4 per cwt. to $38 per head. Negotiated prices for lean hogs were $57.26 per cwt., a $5.61 decline. Cash prices for fed cattle are about steady with the same week a year ago, and prices for lean hogs are about $1 per cwt. lower.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $126 per cow. That would be $51 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 $186 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $146 per head in 2017, up from $114 in 2016.

For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $25 per head, compared to $5 per head last year. Pork packers are projected to earn $23 per head in 2017, down slightly from $24 profit per head in 2016.

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