Andrew Griffith, agricultural economist at the University of Tennessee, said in a letter to Extension agents that there was a good chance that boxed beef prices had hit their seasonal low.
But that didn’t mean prices were likely to break out to the upside.
“If they have hit their low then there is a good chance they will be somewhat stagnant for a while before a slow grind higher leading up to the end of the year holidays,” Griffith said.
Another analyst said that if choice boxed beef prices follow the 2014-2018 average for direction, then prices could bump for a bit into August and then fade through September. At that point, beef prices could rise for the holidays.
That will be led by beef ribeye prices, the analyst said. If everything returns to normal, demand for rib roasts will be noticeable and will peak in early December as restaurants and retail grocers fill their expected needs.
HOLIDAY OBSERVANCE CRUCIAL
Just how high boxed beef prices go through the end of the year may depend on how the holidays are celebrated if the coronavirus remains a concern, he said.
Another analyst agreed, and said the COVID-19 effects on school, travel and gatherings would be crucial to strength in meat prices in general.
If normal celebrations are allowed, then turkey consumption will increase for the Thanksgiving Day holiday with a smaller surge for the Christmas celebrations, the analyst said. Ham and to a lesser extent, beef rib consumption will increase for both holidays.
But if the pandemic resurges, as it may do once schools reopen, then shutdowns likely will flare up again, keeping people at home and away from holiday celebrations, the analyst said. This will limit buying interest for all holiday meats, and without the consumption surge at the end of the year, prices for these items could lag while prices for other things like beef roasts, ground beef and chicken may be supported.
PRODUCTION FORECASTS LIMIT GAINS
Plus, expectations of strong beef production through the end of the year will temper wholesale beef values to some degree simply because of the quantity supplied to the market, Griffith said.
And if that weren’t enough, hog slaughter is expected by many to be up for the rest of the year as packers work through a backlog of market-ready hogs, the analyst said.
Slaughter backlogs for cattle, hogs and chickens could get worse through the end of the year if the virus resurges, the analyst said. Packing plants, with their close working environments for employees who have to work to get from paycheck to paycheck, are places ripe for infection transmission.
If schools, which are breeding grounds for all kinds of illness under normal conditions, turn into a coronavirus trading post, then meat production will suffer because of ill employees or employees with ill children, the analyst said.
Any way it is sliced, this pandemic looks like it will have a very long tail, the analyst said.
CATTLE, BEEF RECAP
Fed cattle trading was reported this week at $97 to $97.50 per cwt on a live basis, up $2 to down $2.50 from last week. Dressed-basis trading was at $160 per cwt, up $2.
The USDA choice cutout Thursday was up $0.69 per cwt at $201.80, while select was up $2.01 at $191.50. The choice/select spread narrowed to $10.30 from $11.62 with 115 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $139.24 per cwt, down $0.59. This compares with Thursday’s Aug contract settlement of $143.02, up $1.05.