Profit tracker: Pork producer margins maintain momentum

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Pork producer margins inched closer to profitability last week, thanks to strong hog prices and improved cutout values. Meanwhile, packer margins are essentially holding steady at more than $6 per head, according to Sterling Marketing, Vale, Ore.

For the week ending Oct. 19, farrow-to-finish producers were losing just 17 cents per head on average, a $1.36-per-head improvement from the week before. While that’s still far short of the $12.04-per-head profit for the same week in 2011, it’s significantly better than the losses accruing just one month ago at $30.88 per head.

Feed costs, while remaining high, have stabilized to around $130 for hogs placed into finishing this fall as illustrated by costs as on Oct. 19, as well as the previous week and month.

Hog prices also have stabilized in the $80-per-hundredweight range—at $84.08 as of last Friday and $82.41 for the previous week. Last month, the Western Corn Belt negotiated, lean-carcass price was $69.97 per hundredweight; in 2011, it was $93.21.

Packers recorded a $6.68-per-head profit as of Oct. 19, which compares to the week before at $6.18. That’s down $5.95 per head from last month. For the same week in 2011, packers made $10.68 per head.

The Sterling Pork Profit Tracker for the week ending Oct. 19:

  • Average farrow-to-finish margins: -$0.17 per head
  • Average pork packer margins: $6.68 per head

Sterling Marketing provides the Sterling Pork and Beef Profit Trackers, which are calculated using actual weekly prices for hogs and cattle, feed costs, pork and beef cutout prices, drop credits and other factors that influence profit margins.

Cattle feedlot losses also have stabilized in the $30s-per-head range. For the week ending Oct. 20, losses averaged $35.60 per head versus $38.10 the week before. But that is dramatically better than one month ago when losses were running $198.16 per head. For the same week in 2011, feedlots were losing $8.86 per head.

Beef packer margins improved on the week, reporting an average loss of $48.54 per head versus $61.45 the week before. In 2011, packers were recording a $63.46-per-head loss.

The Sterling Beef Profit Tracker for the week ending Oct. 20:

  • Average feedyard margins: -$35.60 per head
  • Average packer margins: -$48.54 per head
  • Sterling Profit Quotient: -119.8

The Sterling Pork and Beef Profit Trackers are produced by Sterling Marketing Inc. and John Nalivka, president, Vale, Ore., and are published weekly by Pork Network.



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