Packers appear to be coming off several months of decent profits and may be moving into a time of razor-thin margins.
John Nalivka's Sterling Marketing says packers generally had profits varying from $35 to $120 per head May through October of this year. His projections through 2016 show monthly average profits from $12 to losses of $9.
Nalivka's data shows the big issue for packers is the decline in beef prices, including decreasing drop credits, which are falling in concert with U.S. beef export business. These he predicts will remain weak, slowly declining through the end of next year.
Among other things, Nalivka's projections predict some recovery in Choice and Select cutout next winter into next summer, than another decline.
He also predicts fed cattle, a major input for packers, will post a low at year's beginning and end of $132-134, with a spring high of $142 in about March or April.