Feeding, packing margins improve; pork margins tumble

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Cattle feeding margins improved more than $26 per head last week, leaving average losses at just over $67 per head, according to the Sterling Beef Profit Tracker.

Beef packers saw their margins improve $3 per head on the week leaving losses at more than $79 per head. The Sterling Beef Profit Quotient improved 80 points for the week and the industry profitability index is now negative 222.8, according to estimates developed by Sterling Marketing, Inc., Vale, Ore. A month ago the Sterling Beef Profit Quotient was a negative 182.5.

Pork producer margins declined nearly $17 per head last week, with margins now at a negative $41.65 per hog marketed. Negotiated cash hog prices declined $1.52 per hundredweight last week. Pork packer margins improved 21 cents per head for the week, leaving profits at $7.58 per head, according to the Sterling Pork Profit Tracker.

A year ago cattle feeders sold cash cattle at $124.14 per hundredweight, resulting in losses of $15.97 per head. Last year cash hogs fetched $83.57 per hundredweight, resulting in losses of $8.45 per head.

The Sterling Beef and Pork Profit Trackers are calculated using actual weekly prices for both cattle and hogs, feed costs, beef and pork cutout prices, drop credits and other factors that influence profit margins.

The Sterling Beef Profit Tracker for the week ending Nov. 24:

  • Average feedyard margins: -$67.07 per head.
  • Average packer margins: -$79.63 per head.
  • Sterling Profit Quotient: -222.8.

The Sterling Pork Profit Tracker for the week ending Nov. 23:

  • Average farrow-to-finish margins: -$41.65 per head.  
  • Average pork packer margins: $7.58 per head.

The Sterling Beef and Pork Profit Trackers are produced by Sterling Marketing Inc. and John Nalivka, president, Vale, Ore., and are published weekly by Drovers/CattleNetwork.



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JR    
WA  |  November, 28, 2012 at 10:17 AM

I do not for a minute believe that packers are losing money. If I am in business and I am unprofitable, I will stop doing business. Do you really think that I believe that they have been operating in the red for the entire year?? That should make the stock holders really happy. Please enlighten me.

jmcv02    
manhattan, ks  |  November, 28, 2012 at 05:48 PM

If you can pay your variable costs then you can keep pushing your fixed costs aside, till you are profitable, thats how they work. You fail also to understand that packers may have different parts of the business that generate money to make up for losses in packing, till the economics are profitable again.


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