Profit tracker: Pork producer and packer margins improve

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While pork producer margins remain in the red, they have improved greatly in the past week. Farrow-to-finish margins gained back $5.61 per head as of Oct. 12, compared with the week before. Pork packers increased their profit margin by $2.19 per head, according to Sterling Marketing, Vale, Ore.

As of the week ending Oct. 12, producers lost an average $1.53 per head. That compares with a $7.14-per-head loss the week before and a dramatic deficit of $36.15 per head one month ago. For the same period in 2011, producers were bringing home an average $6.97-per-head profit.

While feed costs continue to weigh on producers’ profitability, a bit of relief has occurred as the feed cost for hogs placed in finishing last week calculated to $129.54 versus $136.32 a month ago. In 2011, the feed cost was $100.58.

Hog prices have improved significantly from this time last month as marketings have slowed from the heavy run of producers pulling hogs ahead. Western Corn Belt negotiated, lean carcass price as of Friday was $82.41 per hundredweight, up $1.74 from the week before. Just one month ago, prices were $65.85 per hundredweight.

For the week ending Oct. 12, packers were seeing a $6.09-per-head profit. That compares to $3.90 the week before and $7.68 per head for the same week in 2011. Of course, that’s down sharply from profits a month ago at $23.52 per head.

The Sterling Pork Profit Tracker for the week ending Oct. 12:

  • Average farrow-to-finish margins: -$1.53 per head
  • Average pork packer margins: $6.09 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 margins held nearly steady on the week ending Oct. 13; losses tallied $38.10 per head versus $35.01 the week before. But that is remarkably better than last month when the feedlot margin was in the red by $185.58 per head. For the same week in 2011, feedlots were making $21.38 per head.

Packer margins slipped further, reporting an average loss of $61.45 per head, compared to $52.63 the week before. For the same week in 2011, packers lost an average of $65.07 per head.

The Sterling Beef Profit Tracker for the week ending Oct. 13:

  • Average feedyard margins: -$38.10 per head
  • Average packer margins: -$61.45 per head
  • Sterling Profit Quotient: -130.7

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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