Barring a major setback, it appears that beef markets are moving past the worst of the disruptions that have caused upheaval in recent weeks. Beef markets were thrown into turmoil in March as food service markets were sharply curtailed and beef demand focused on retail grocery. This caused bottlenecks in supply chains and an initial wave of disruptions in product flows.

Cattle and Feed

Beginning in early April, COVID-19 began to impact workforces in many packing plants causing plant closures and reduced slaughter rates. Cattle slaughter and beef production decreased on a year over year basis for four consecutive weeks. The lowest point occurred the last week of April when total cattle slaughter was down 34.8 percent year over year. Beef production that same week was down 33.8 percent compared to the same week one year ago. Significant recovery has occurred from that low with estimated cattle slaughter the week ending May 30 down 10.9 percent year over year. With cattle carcass weights increasing sharply due to delays in marketing fed cattle, estimated beef production last week was down just 7.6 percent year over year.

Choice boxed beef prices increased beginning in late March until late May. After averaging under $210 per hundredweight early in the year, Choice boxed beef prices increased in late March, dropped briefly in early April, before increasing to a peak at $459.04 per cwt in mid-May. Choice boxed beef prices have dropped to a weekly level of $374.04 per cwt at the end of May.

Individual beef products have been on a wide variety of dynamic paths through all the turmoil in both demand and supply since March. Prices for beef products dependent on food service demand, including many middle meat cuts, dropped in March before general shortages of products pushed prices higher in April and May. Choice wholesale beef tenderloin (IMPS 189A), for example, dropped from an average price just under $970 per cwt. early in 2020, to a weekly low of $533.33 per cwt in early April before increasing to a mid-May peak of $1,238.88 per cwt.  Choice tenderloin prices have decreased to $1,219.68 per cwt by the end of May.

Many end meats from the Chuck and Round, saw increased demand beginning in March continuing through April and pushed even higher by decreased beef supplies to mid-May. For example, the price of Chuck Rolls (IMPS 116A) increased weekly, beginning in mid-March from a pre-COVID-19 average near $266 per cwt, to a peak in early May of $628.94 per cwt before dropping back to $466.03 per cwt by the end of May. Several products in the round displayed similar price patterns since mid-March.

The last few weeks have revealed much about the nature of specialized beef supply chains and much about the variable demands for the wide variety of beef products. It has also revealed how market prices adjust to wild swings in beef product demand and supply conditions. Additional dynamics are expected as food service continues a slow recovery and macroeconomic conditions continue to affect beef demand, but hopefully beef product markets are settling back into a much more stable situation and with typical product price relationships reestablished.

(Derrell S. Peel is a livestock marketing specialist for Oklahoma State University.)

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