Losses deepen for pork producers

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Pork producer margins declined again last week, although the additional loss was limited to about $1.30 from the week earlier, according to Sterling Marketing, Vale, Ore. Still mired in red ink, producer margins remain under severe pressure from the effects of high corn prices due to the summer’s drought- the worst since the 1950s.

Farrow-to-finish producers lost an average $42.96 per head for the week ending Nov. 30, according to John Nalivka, author of the Pork Profit Tracker report. The previous week’s report recorded losses of $41.65 per hog. One month ago, margins were in the red $9.37 per head while one year ago, producers lost $3.56 per head.

Meanwhile, pork producers are anticipating higher hog prices by next spring. “Futures prices for spring and summer hogs have been high recently, sending a signal to hog producers that profits will get a lot better by then,” says Rick Pottorff, chief economist, Doane Agricultural Services.

Feed costs inched up again from the prior week to $131.88 for hogs placed into finishing units as of Nov. 30.  Hog prices for the week nosed up slightly to $77.75 per hundredweight compared to $77.18 recorded the prior week.

Packer profits for the week ending Nov. 30 improved to $11.30 per head compared to $7.58 the week before. Sterling Marketing reports that for the same period in November 2011, packers were averaging a profit of $4.56 per head.    

The Sterling Pork Profit Tracker for the week ending Nov. 30:

  • Average farrow-to-finish margins: -$42.96 per head
  • Average pork packer margins: $11.30 per head

Cattle feedlot losses moderated for the week ending Nov. 30, coming in at -$46.24 per head compared to -$67.07 for the week earlier.

Beef packer margins showed a loss of $82.37 compared to a loss of $79.63 the week earlier, according to the Sterling report. One year ago, beef packer losses averaged $56.90 per head.

Sterling Marketing provides the Pork and Beef Profit Trackers, which are calculated using actual weekly prices for hogs and cattle, feed costs, pork and beef cutout prices as well as other factors that influence profit margins. The Pork and Beef Profit Trackers are produced by John Nalivka, president, Sterling Marketing, and are published weekly by Pork Network.



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