Falling beef prices turn packer margins negative

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Wholesale beef prices trending lower over the past two weeks led to negative beef packer margins last week as cash prices remain steady. Packer margins could be further stressed as cattle supplies tighten through the remainder of the year.

Packers saw profit margins fall $22.16 per head last week after selling for gains of between $14 and $21 per head over the previous four weeks according to the Sterling Beef Profit Tracker.

Feeder margins remain negative, but improved again last week by moving $8.87 higher to an even negative $29.00 per head. Feeder profit margins are $12.58 per head better than a month earlier, but $12.40 per head lower than this time last year.

Choice steers remain consistent, averaging $123, and 750 to 800 lb feeder prices increased by $1.90 per cwt to $153.71.

Better feeder margins were a result of falling feed costs which fell $58.09 per head to $337.07 last week according to estimates by Sterling Marketing, Inc., Vale, Ore.

Pork producer profit margins were more than double the previous week’s averages as a result of higher prices and lower feed costs.

Producer margins were $7.20 per head higher last week, increasing to $12.29. Negotiated cash hog prices gained $3.20 per hundredweight while feed costs dropped $2.96 according to the Sterling Pork Profit Tracker.

Pork packer margins remain negative, falling another $2.68 per head to negative $3.02. Packer margins are $4.36 per head lower than a month earlier and $26.54 lower than this time last year.

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 September 14:

  • Average feedyard margins: -$29.00 per head.
  • Average packer margins: -$8.06 per head.

The Sterling Pork Profit Tracker for the week ending September 13:                                          

  • Average farrow-to-finish margins: $12.29 per head.
  • Average pork packer margins: -$3.02 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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