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Profit Tracker: Packer Margins Higher

Beef packer margins increased another $45 per head for the week ending March 27 while a rally in cash prices pulled feedyard closeouts into the black.

Cash cattle prices at $119.25 were nearly $10 per cwt. higher, resulting in average feedyard profits of $25 per head, about $115 per head better than the previous week, according to the Sterling Beef Profit Tracker.

Using an average calculated beef cutout price of $253.61 per cwt. for the week ending March 27, and an average cash cattle price of $119.25, Sterling estimated average beef packer margins at $555 per head.

(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. Here are the calculations.)

Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices.

The packer/feeder cash margin spread for the week ending March 28 was $530 per head in favor of packers.

A year ago cattle feeders found cash profits of $150 per head on closeouts the last week in March, while packers saw profits of $132. (Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Feeder cattle represent 72% of the cost of finishing a steer compared to 72% a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins improve nearly $20 per head, with per head profits of $3. Lean carcass prices traded at $60.98 per cwt., $9.46 per cwt. higher than the previous week. A year ago pork producers earned $36 per head. Pork packers saw average profits of $30 per head, down $14 per head from the previous week.

(Editor’s note: Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

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