Cattle futures continued to edge higher to start the week, but with plenty of continued uncertainty surrounding supply chain disruptions (see below).
Live Cattle futures closed an average of 65¢ higher.
Feeder Cattle futures closed an average of 98¢ higher, (70¢ higher at the back to $1.32 higher).
Wholesale beef values took another giant leap higher Monday as buyers chase decreased supplies.
Choice boxed beef cutout value was $32.60 higher Monday afternoon at a $410.05/cwt. Select was $19.53 higher at $376.66. That made the Choice-Select spread $33.39.
Corn futures closed mostly 2¢ to 3¢ lower.
Soybean futures closed 11¢ to 13¢ lower through near Sep and then 4¢ to 9¢ lower.
Major U.S. financial indices bounced back from early follow-through pressure Monday, buoyed by tech stocks.
The Dow Jones Industrial Average closed 26 points higher. The S&P 500 closed 12 points higher. The NASDAQ closed 105 points higher.
Cattle futures in recent days suggest increasing confidence that last week’s Executive Order mandating meat and processing facilities remain open will help normalize supply chain, eventually.
In the meantime, cattle slaughter and beef production continue significantly lower year over year, while the backlog of fed cattle continues to build.
Estimated cattle slaughter for the week ending May 2 was 425,000 head, which was 38% less year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. For the past four weeks, he says total cattle slaughter averaged 26.4% less than the same weeks last year–down 689,000 head, or a little more than a week’s worth of cattle slaughter.
Similarly, in his weekly market comments, Peel explains beef production was down 35% last week, compared to a year earlier; an average of 25% less for the past four weeks. Relative to the first 14 weeks of the year, before current COVID-19 production declines began, he says the combined 520 million lbs. of reduced beef production over the last four weeks equates to losing a week’s worth of production.
“Given when packing plant workers began to be impacted and the additional attention now focused on protecting worker health, it is likely that we are currently at or very near the worst point of packing plant disruptions,” Peel says. “However, it is unclear how fast plants will resume production levels in the coming weeks. It is likely that the effective capacity will be reduced permanently or certainly for the foreseeable future because of the safety changes needed at packing plants. The impacts on cattle markets will linger for many weeks before backlogs are cleaned up and markets are current again.”
For consumers, Peel emphasizes there is no shortage of beef in the country. Any shortages encountered will be temporary.