TL;DR:
- Beef and pork packer margins have decreased, with beef packers facing a $70 loss per head and pork packers earning $32 per head last week.
- Cash cattle prices increased, leading to a slight improvement in closeouts for cattle, while feed costs saw a reduction.
- Annual projections for 2024 suggest a somewhat brighter future for packer margins, with expected losses for beef packers narrowing and pork packer profits increasing.
In the latest reports from Sterling, both beef and pork packer margins experienced a downturn over the past week. The beef sector, in particular, felt the pinch as cash cattle prices rose by $3.50 per cwt, improving closeouts by $48 per head but still leaving losses at $6 per head. This uptick in cattle prices led to a $49 per head decrease in beef packer margins, culminating in a $70 loss per head.
Looking ahead to 2024, the outlook appears slightly more optimistic. Beef packer margins are projected to improve, with anticipated losses shrinking to $36.00 per head. This forecast suggests a more favourable scenario for packers in the long term, despite current challenges.
On the cattle market front, cash cattle averaged $181 per cwt, while wholesale beef prices fell to $293.13 per cwt. Feed costs experienced a notable drop of $25 from the previous week, settling at $398 per head.
The breakeven point for cattle sold last week was $181.46 per cwt, with feeder steer prices climbing to $239.89 per cwt, a significant 24% increase from the previous year. The total cost to finish a steer last week was estimated at $2,540 per head, marking a 14% rise from last year. The fed cattle slaughter count stood at 503,820, slightly down from the previous year, with plant capacity operating at 86.0%.
In the pork sector, farrow-to-finish hog producers recorded losses of $10 per head, whereas pork packers maintained profitability with an average gain of $32 per head. Lean carcass prices saw a modest increase to $66.25 per cwt.
Despite a week-on-week decrease, pork packer margins remained in the positive territory at $31.53 per head for the week ending February 10, 2024. The year ahead holds promise for pork packers, with margin projections rising to $48.75 per head, indicating a potentially more profitable year compared to both the current week and the previous year.
