Profit tracker: Producer margins continue eroding

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For the week ending Aug. 10, pork producer profit margins fell nearly $8 per head from the prior week. The continued erosion in margins follows record-high feed prices resulting from the 2012 drought. Packer margins meanwhile have turned positive, though barely, showing a $0.33 per head gain for the same week. 

For farrow-to-finish producers, the average profit margin reported for the week ending Aug. 10 was $15.09 per head, according to Sterling Marketing, Vale, Ore.  That compares to a $22.89-per-head profit for the previous week and $36.49 per-head profit during the comparable week in 2011.

For the week ending Aug. 10, producer breakeven costs are estimated at $100.45 for pigs placed in barns last week, little changed from the prior week.

Packer margins for the week struggled to the profit range, at 33 cents per head compared to the previous week’s loss of $1.93 per head. This compares to a profit of $5.90 per head for the same week in 2011.

Western Corn Belt negotiated hog prices dipped about $1 last week from the previous week to an average $92.38 per hundredweight. For the same week in 2011, hog prices averaged $106.16 per hundredweight. 

The Sterling Pork Profit Tracker for the week ending Aug. 10:

• Average farrow-to-finish margins: $15.09 per head
• Average pork packer margins: -$0.33 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 feeding losses dipped below $200 per head for the first time in a month as cash fed cattle prices gained $1 per hundredweight to $119. Despite the $35 per head improvement, feedyards are still losing more than $185 per head, according to the Sterling Beef Profit Tracker.

Packer margins slipped further into the red, with losses now exceeding $45 per head. The Sterling Beef Profit Quotient gained 104 points for the week, but the industry profitability index remains a negative 571, according to estimates developed by Sterling Marketing, Inc., Vale, Ore.

The Sterling Beef Profit Tracker for the week ending Aug. 10.

  • Average feedyard margins: -$185.58 per head.
  • Average packer margins: -$45.28 per head.
  • Sterling Profit Quotient: -571.3.

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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