Beef packer margins saved by improving beef prices

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Feeder margins increased as cash cattle prices reached new record highs while packer margins improved on better beef prices according to the Sterling Beef Profit Tracker.

Packer margins remain negative, but were $10.22 per head better than a week earlier moving from negative $60.28 to negative $50.06 per head according to estimates by Sterling Marketing, Inc., Vale, Ore.

Packers were forced to pay higher cash prices which increased by an average of $3.34 per hundredweight last week to $132.34, however they were able to shrink negative margins with higher beef cutout values. Beef prices moved $3.25 higher last week to $195.70.

Packer margins are further in the red than a month earlier when losses were recorded at negative $35.35 per head. Losses averaged negative $45.46 in the same week a year earlier.

Feeder margins improved again with big gains as cash trade advanced. Feeder margins moved 35.99 per head higher than a week earlier to $124.67. Feeder margins are $48.19 per head better than a month earlier and $181.31 higher than the negative $56.64 recorded this time last year. In addition to higher cash values, feeder costs fell 30 cents per head last week, although the total cost per head increased by $20.03 per head.

Pork producers saw profit margins turn negative last week after average negotiated cash hog values fell $4.41 per hundredweight to $88.46.

Producer margins fell to negative $9.88 per head, a $10.55 decline from the previous week according to the Sterling Pork Profit Tracker. Producer margins are below the average of $4.57 per head set a month ago and negative $1.96 recorded a year earlier. Feed costs and total costs declined, but not enough to offset sales losses.

Packers capitalized on lower cash hog sales to pull profit margins out of the red, increasing by $8.06 to $4.91 per head. Higher margins were limited by falling pork prices which lost 44 cents per hundredweight to $94.65.

The Sterling Beef Profit Tracker for the week ending October 26:

  • Average feedyard margins: $124.67 per head.
  • Average packer margins: -$50.06 per head.

The Sterling Pork Profit Tracker for the week ending October 25:                                          

  • Average farrow-to-finish margins: -$9.88 per head.
  • Average pork packer margins: $4.91 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, and PorkNetwork.

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