COVID-19 infections at packing plants, as well as precautionary measures, continue to hamper production speed and volume, while cleaving a wider divide between fed cattle prices and wholesale beef values.
Early negotiated cash fed cattle trade stumbled from the blocks Tuesday with dressed prices up north $5-$18 lower at $150/cwt. Live sales in Nebraska were mainly sharply lower at mostly $95. Early live sales in the Texas Panhandle were $5 lower at $100.
Wholesale beef values continued to scream higher, though, as buyers scramble to procure the declining supplies.
Choice boxed beef cutout value was $11.47 higher Tuesday afternoon at $259.85/cwt. Select was $10.83 higher at $248.82. Week to week, that’s $33.18 higher for Choice and $33.05 higher for Select. For perspective, the highest price for Choice following the Tyson plant fire last summer was $241.74.
Cattle futures, especially Live Cattle sagged lower, helped along by another down day in equity markets.
Live Cattle futures closed an average of $1.23 lower (82¢ to $1.92 lower).
Except for 37¢ higher in the back contract, Feeder Cattle futures closed an average of 50¢ lower.
Corn futures closed mostly 3¢ to 6¢ lower.
Soybean futures closed mostly 4¢ to 7¢ higher.
Major U.S. financial indices closed sharply lower again Tuesday. Along with anemic quarterly earnings reports, investors seemed to continue their focus on unraveling crude oil prices as a bellwether of economic misery to come.
A day after the expiring May contract for West Texas Intermediate futures closed at -$37.63, new spot month Jun closed $8.86 lower at $11.57.
The Dow Jones Industrial Average closed 631 points lower. The S&P 500 closed 86 points lower. The NASDAQ closed 297 points lower.
The U.S. Senate approved $484 billion emergency relief legislation Tuesday evening, which would provide an additional $321 billion in funding for the Paycheck Protection Program (PPP). Of this amount, $60 billion is set aside for small lenders and community-based financial institutions that serve the needs of unbanked/underserved small businesses, according to the National Cattlemen’s Beef Association (NCBA).
Authorizing language was included to allow agricultural enterprises as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)) with not more than 500 employees to receive Economic Injury Disaster Loan (EIDL) grants and loans.
“We are pleased to see the reaffirmation of Congress’s intent that cattle producers be granted access to the EIDL program administered by the Small Business Administration,” says Ethan Lane, NCBA vice president of government affairs. “We urge the House of Representatives to move swiftly to approve this package and deliver these funds to producers across the country who are continuing to keep grocery store shelves full during this economic disaster.”
The proposed legislation comes just days after USDA announced the Coronavirus Food Assistance Program (CFAP). The program includes $16 billion in direct payments to farmers and ranchers including $9.5 billion of emergency funding from the CARES Act and $6.5 billion of funding from the Commodity Credit Corporation (CCC). Additionally, CFAP includes $3 billion in purchases of meat, dairy and produce to support producers and provide food assistance to those in need. CFAP is funded from the Coronavirus Aid, Relief and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA) and other USDA programs.
More specifically, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains, “The beef cattle industry will receive $5.1 billion of CFAP funding to partially offset 2020 losses due to COVID-19. Cattle producers will receive a single direct payment determined by two calculations, including 85% of price losses from Jan. 1 to Apr. 15, 2020 and 30% of expected losses for two quarters after April 15. In order to qualify, commodities must have experienced at least a 5% price decrease between January and April. USDA expects to begin sign-up in early May and distribute payments by late May or early June.”