Profit Tracker: Packers Can’t Stop The Bleeding
Beef packers saw per head losses nearly double last week as wholesale beef prices tumbled $7 per cwt. lower. The weekly average price for market-ready cattle was slightly lower as packers secured some early-week trades at lower money. Prices rose throughout the week, however, as cattle feeders dug in their heels.
Average cattle feeding margins were estimated at $180 per head the week ending Dec. 10 as cash prices averaged $156.38 per cwt., or $16.78 per cwt. higher than a year ago. Beef packer margins were estimated at a negative $141, according to the Sterling Beef Profit Tracker. That’s the largest weekly packer loss in seven years. That compares with packer profits of $297 per head the same week a year ago.
Last week’s Choice beef cutout averaged $242.50 per cwt., down $6.85 from the previous week and down $22.42 per cwt. from a year ago.
Costs associated with finishing cattle have increased dramatically since April. The cattle sold last week carried a total feed cost of $552 per head, which is 14% higher than the $472 feed costs for cattle sold the same week a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Oregon.
Cattle marketed last week had a breakeven of $143.49 per cwt., while cattle placed on feed last week have a breakeven of $151.70 per cwt. Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $177.75 per cwt., and feed costs of $566 per head. The feeder steer price is 7% higher than last year.
The estimated total cost for finishing a steer last week was $2,008 per head, up 12% from last year’s estimate of $1,764 per head.
Cattle slaughter totaled an estimated 652,000 head, about 15,000 head less than the same week last year. Packing plant capacity utilization was estimated at 90.0% compared to 89.8% last year.
Farrow-to-finish hog producers saw losses of $1 per head last week, about a 50-cent per head improvement over the previous week, and up $20 per head compared to last year’s $21 per head losses. Lean carcass prices averaged $86.13 per cwt., down $1.93 per cwt. from the previous week and up $19.89 from last year (23%).
Pork packers saw losses of about $6 per head, or $2 per head less than the previous week. Last year pork packers saw profits of $32 per head. Hog slaughter was estimated at 2.572 million head, down 18,000 head from the previous week and down 4,000 head from last year.
Pork packer capacity utilization was estimated at 96.2% compared to 95.7% last year.
(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices. The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs. Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)
