Further erosion of market hog prices dropped pork producer margins by more than $10 per head on the week ending Aug. 24. Hog slaughter runs increased and lean-carcass prices for the Western Corn Belt slipped to $84.07 per hundredweight on the week, compared with $88.80 as of the Friday before.

Feed prices for hogs placed in finishers as of Aug. 24 increased about $6 to $147.33, according to Sterling Marketing, Vale, Ore. That compares to $119.27 one year ago.

Average margins for Farrow-to-finish producers were reported at a profit of $4.48 per hundredweight, but they continue to erode. For the previous week, producer margins were $14.76 per hundredweight and $20.21 for the same period in 2011.

While market weights have generally held steady, producer sentiment is that packers will need to back off somewhat on weights this fall as producer losses continue to mount due to the drought-induced high feed prices.  

Packer margins continued to strengthen for the week ending Aug. 24, reported at $7.36 per head versus $4.94 the week before and $13.61 for the same week a year ago.

The Sterling Pork Profit Tracker for the week ending Aug. 24:

  • Average farrow-to-finish margins: $4.48 per head
  • Average pork packer margins: $7.36 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 margins gained back $42 for the week ending Aug. 25, for an average loss of $156.97 per hundredweight. The week before margins were a negative $199.07 per head, and one-year ago cattlemen were losing $57.27.

Packers saw a $15-per-head improvement in their profit margins, which ended the week at $24.46 per head. That compares to a $9.17-per head profit the week before, but also compares to last year’s $73.05-per-head profit.

The Sterling Beef Profit Tracker for the week ending Aug. 25:

  • Average feedyard margins: -$156.97 per head
  • Average packer margins: $24.46 per head
  • Sterling Profit Quotient: -467.0

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.