Cattle feeding margins climbed $36 per head higher last week

Cattle feeding margins climbed $36 per head higher last week, for total average cash profits of $475. That’s $175 more than a month ago, and represents the 18 consecutive week of feedyard profitability, according to the Sterling Beef Profit Tracker. Feedyards have clearly held the marketing leverage for most of 2017, but packers are also enjoying healthy profits. Last week packer margins averaged $164 for every animal slaughtered, a $16 decrease from the previous week, but $147 better than a month ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore. Last week’s 5-area cash fed cattle price was steady at $128.11, about $10 higher than a month ago. The cost of finishing a steer was calculated at $1,307 per head, which is $625 less than the $1,932 a year ago. A month ago cattle feeders were earning $302 per head, while a year ago losses were calculated at $42 per head. Feeder cattle represent 72% of the cost of finishing a steer, compared to 78% last year. Farrow-to-finish pork producers earned $23 per hog last week, about $3 per head lower than the previous week. A month ago farrow-to-finish pork producers showed a profit of about $34 per head. Pork packers saw their margins decline $3 per head to $16. Negotiated prices for lean hogs were $68.03 per cwt. last week, about $1.21 per cwt. lower. Cash prices for fed cattle are $8 per cwt. lower than last year and prices for lean hogs are about $4 higher than last year. Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $78 per cow. That would be $99 per head less than the estimated average profit of $177 for 2016. Estimated average cowcalf margins were $438 per cow in 2015. For feedyards, Nalivka projects an average profit of $133 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $51 per head in 2017, down from $114 in 2016.   Cargill said stronger consumer demand for beef and higher cooked chicken exports out of Southeast Asia helped lift the company’s third-quarter earnings. Earnings in the animal nutrition and protein unit rose significantly against a weak year-ago period, the company said. Although below the earnings pace set in the first half, the North American protein business continued to benefit from renewed consumer demand for beef, which pulled more boxed beef and case-ready volume through its supply chain, Cargill said. In the poultry business, higher cooked chicken exports out of Southeast Asia and improved processing yields and fresh chicken sales in Europe gave an additional boost to results. Cargill’s adjusted operating earnings rose 50 percent to $715 million in the third quarter ended Feb. 28, from $476 million in the same quarter a year earlier. Net earnings rose 42 percent in the quarter, to $650 million from $459 million a year earlier, also lifted by improved results in the food ingredients business. Revenue increased 8 percent to $27.3 billion. BMO Capital Markets analyst Kenneth Zaslow said strong North American beef packer margins benefited from lower cattle prices and improved consumer demand. However, Cargill's margin strength likely occurred early in its quarter, as industry margins collapsed in February before recovering in March, Zaslow said in a note to clients after the earnings release.