U.S. beef markets are starting to recover from several weeks of upheaval after packing plants around the country were hit hard with COVID-19. Derrell Peel, livestock marketing specialist for Oklahoma State University, said the worst of the disruptions may be over.
“Beef markets were thrown into turmoil in March as foodservice 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,” Peel said.
He said 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 with slaughter down 34.8% from the prior year. Peel said beef production that same week was down 33.8% 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% 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 % from a year ago,” Peel said.
With reduced production the “choice” boxed beef prices began to rise in late March through late May. After averaging under $210 per hundredweight early in the year, choice boxed beef prices increased in late March. Prices peaked at $459.04 per hundredweight in mid-May. Choice boxed beef prices have dropped to a weekly level of $374.04 per hundredweight at the end of May.
Peel said 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 foodservice demand, including many middle meat cuts, dropped in March before general shortages of products pushed prices higher in April and May.
He said choice wholesale beef tenderloin dropped from an average price just under $970 per hundredweight early in 2020, to a weekly low of $533.33 in early April before increasing to a mid-May peak of $1,238.88 per hundredweight. Choice tenderloin prices have decreased to $1,219.68 per hundredweight by the end of May.
Peel said chuck and round cuts of beef saw increased demand beginning in March continuing through April and pushed even higher by decreased beef supplies to mid-May.
“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,” Peel said.