Negotiated cash fed cattle trade so far this week is steady to mixed with live sales in the Texas Panhandle at $95-$100/cwt. and at $90-$100 in Kansas, where there were too few transactions to trend. Up north, live prices are steady in Nebraska at $95 and up to $5 higher in the western Corn Belt at mostly $100. Dressed sales are steady to $10 lower in Nebraska at $150; steady in the western Corn Belt at $150-$160.
Cattle feeders offered 4,484 head in the weekly Fed Cattle Exchange auction, selling 818 head. Of those, 174 head sold for a weighted average price of $100/cwt. for delivery at 1-9 days. Another 644 head for delivery at 1-17 days sold for a weighted average price of $96.57.
President Trump signed an executive order late Tuesday, using the Defense Production Act, to mandate that meat packing and processing facilities remain open during the COVID-19 pandemic.
“To ensure worker safety, these processors will continue to follow the latest guidelines from the Centers for Disease Control and Prevention and the Occupational Safety and Health Administration,” according to a White House Fact Sheet (see below).
Cattle futures closed narrowly mixed Wednesday, as traders weigh short-term pressure, due to current disruptions in packing and processing, against a hopeful surge in demand as the economy reopens.
Live Cattle futures closed 42¢ lower to 25¢ higher, with sluggish trade.
Except for an average of 31¢ lower in three contracts, Feeder Cattle futures closed an average of 24¢ higher, in extremely light trade.
Wholesale beef values continued to climb Wednesday.
Choice boxed beef cutout value was $26.56 higher Wednesday afternoon at a $357.38/cwt. Select was $19.03 higher at $339.91.
Corn futures closed mostly 3¢ to 4¢ higher.
Soybean futures closed mostly 5¢ to 8¢ higher.
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Major U.S. financial indices closed higher Wednesday amid reports of promising test results from a potential coronavirus treatment drug. Although expected, support also included the Federal Reserve leaving interest rates unchanged.
“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0.0% to 0.25%,” according to a statement from the Fed. “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
Gains came despite early quantification of domestic economic damage wrought by COVID-19.
Real gross domestic product (GDP) decreased at an annual rate of 4.8% in the first quarter of 2020, according to the advance estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1%.
The Dow Jones Industrial Average closed 532 points higher. The S&P 500 closed 76 points higher. The NASDAQ closed 206 points higher.
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The Executive Order signed by President Trump, mandating meat packing and processing facilities remain open during the COVID-19 pandemic should offer some stability to beef markets. It also bolsters hopes the number of delayed fed cattle marketings can ease sooner rather than later, realizing the timeline is likely counted in months rather than weeks.
“Under the order, the Department of Agriculture is directed to ensure America’s meat and poultry processors continue operations uninterrupted to the maximum extent possible,” according to a White House Fact Sheet.
“Our nation’s meat and poultry processing facilities play an integral role in the continuity of our food supply chain,” says U.S. Agriculture Secretary, Sonny Perdue. “Maintaining the health and safety of these heroic employees in order to ensure that these critical facilities can continue operating is paramount. I also want to thank the companies who are doing their best to keep their workforce safe as well as keeping our food supply sustained. USDA will continue to work with its partners across the federal government to ensure employee safety to maintain this essential industry.”
Estimated daily hog and cattle slaughter are both down about 40% compared to this time last year, according to Jayson Lusk, noted Purdue University food and agricultural economist, in his blog.
“Plant closures and slow-downs from COVID-19 have reached such levels that it will be impossible for consumers not to notice effects on meat prices or availability in the coming weeks,” Lusk says.
“While there are currently no widespread shortages of beef, we are seeing supply chain disruptions because of plant closures and reductions in the processing speed at many, if not most, beef processing plants in the United States. We thank President Trump for his recognition of the problem and the action he has taken today to begin correcting it,” says Colin Woodall chief executive officer of the National Cattlemen’s Beef Association. “American consumers rely on a safe, steady supply of food, and President Trump understands the importance of keeping cattle and beef moving to ensure agriculture continues to operate at a time when the nation needs it most.”
Likewise, Robert McKnight, Jr., president of the Texas and Southwestern Cattle Raisers Association explains the Executive Order should go a long way toward easing consumer fear, as well as preventing additional economic strain on the cattle producers who supply the beef processors.
“The executive order will help ensure a steady, reliable supply of high-quality U.S. protein-not only for customers in the United States, but across the globe,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “The U.S. meat industry is already taking extraordinary steps to ensure worker safety, including COVID-19 testing, temperature checks, use of personal protective equipment and social distancing of employees. But further action is needed to stabilize our meat supply chain, and USMEF greatly appreciates the Trump administration’s prioritization of safe and consistent meat production and processing during this difficult time.”
Under the Executive Order and the authority of the Defense Production Act, USDA will work with meat processing to affirm they will operate in accordance with the CDC and OSHA guidance, and then work with state and local officials to ensure that these plants are allowed to operate, according to Secretary Perdue.
“We understand and appreciate the difficulties facing processing plant workers during this crisis, says Woodall. “Processing plant employees play a role that is critical to the security of this nation and America’s cattle producers offer their sincere gratitude for the work they are doing to keep food shortages from compounding the complex issues we’re facing.”