Favorable Profit Margins for Beef Cattle Industry


The first half of 2017 produced favorable profit margins for all sectors of the beef and pork industries, with cattle feeders experiencing an exceptional string of highly profitable weeks. That’s according to Sterling Marketing’s weekly Beef and Pork Profit Trackers that analyze both sectors on a cash basis without any risk management strategies.

The week of June 23, Sterling Marketing president John Nalivka estimated cash feedyard margins at $285 per head, with farrow-to-finish pork margins at $61 per head. Similarly, packers for both sectors have found the first half of 2017 to be profitable. Beef packers saw a high of $302 profit per head on June 23, with pork packers earing $18 per head.

With the first half of the year in the books, where does Nalivka see profit margins headed? Based on the positive results of the first six months, Nalivka has re-examined his annual profit margins forecast for all sectors.

For cattle feeders, Nalivka projects an annual 2017 profit margin of $260 per head, which likely means there are some rough weeks ahead as the first half of the year averaged better than that. Still, it looks much different than last year’s annual average of a $4.25 per head loss.

Beef packers will post an annual average of $105 per head for 2017, Nalivka projects. That’s down about $9 per head from 2016. His annual farrow-to-finish pork margin is at $19.50 per head, up $14 from 2016, and the annual pork packer margin is $22.50, down $2 from last year.

Cow-calf producers are projected to average a profit of $111 per cow in 2017, Nalivka says. That’s down $66 from 2016, and down $327 per cow from 2015. And the 2017 projection would be a decline of $407 per head from the 2014 average profit of $518 per head. 

Source: Drovers

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