The Livestock Marketing Information Center has projected a sharp dip in US second-quarter commercial beef production with a surge in the third quarter.
Upon reflection, that should be no surprise as the packing industry gets its employee illness issues resolved and works to catch up with the backlog of slaughter-ready cattle waiting in the feedlots.
In case you’ve been living under a rock for the last two months, the world is experiencing a pandemic from COVID-19, a particular type of coronavirus. Many countries and states have issued stay-at-home orders and closed certain businesses in an effort to slow person-to-person contact and, thus, the spread of the disease, which can be deadly.
Packers have been hit hard because they have large numbers of employees who not only work in close proximity to others on the line but who live in tight quarters with many others. Plants have closed, to be reopened by executive order, but they still are operating with reduced staff, which limits their ability to kill cattle and process beef.
That capacity is inching higher again, and fed cattle prices are coming up. Slaughter Wednesday was estimated at 101,000 head, the first time it’s been more than 100,000 in almost six weeks.
Q4 BEEF PRODUCTION NEAR 2019
By the fourth quarter, US beef production may be back near 2019 levels, the LMIC said.
First-quarter beef production was pegged at 6.929 billion pounds. This was up 515 million, or 8.03%, from the 2019 quarter’s 6.414 billion and up 881 million, or 14.6%, from the 2014-2018 average of 6.048 billion.
Second-quarter beef production was estimated at 5.910 billion pounds, down 907 million, or 13.3%, from the 2019 quarter’s 6.817 billion and 362 million, or 5.77%, below the previous five-year average of 6.272 billion.
Third quarter beef production was estimated by the LMIC at 7.300 billion pounds, up 377 million, or 5.45%, from the 2019 quarter’s 6.923 billion and up 845 million, or 13.1%, from the 2014-2018 average of 6.455 billion.
Fourth-quarter beef production was forecast at 7.031 billion pounds, up 30 million, or 0.43%, from fourth-quarter 2019’s 7.001 billion and up 559 million, or 8.64%, from the previous five-year average of 6.472 billion.
PORK PRODUCTION HIT LESS DRASTIC
The hit to US pork production by COVID-19 plant closures in the second quarter was estimated to be less drastic than that taken by beef producers.
First-quarter pork production was pegged at 7.426 billion pounds, up 609 million, or 8.93%, from the 2019 quarter’s 6.817 billion and up 1.180 billion, or 18.9%, from the 2014-2018 average of 6.246 billion.
Second-quarter pork production was estimated at 6.429 billion pounds, down 156 million, or 2.37%, from the year-earlier quarter’s 6.585 billion but up 458 million, or 7.67%, from the previous five-year average’s 5.971 billion.
Third-quarter pork production was forecast at 6.986 billion pounds, up 316 million, or 4.74%, from the 2019 quarter’s 6.670 billion and up 979 million, or 16.3%, from the 2014-2018 average of 6.007 billion.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains at $119 to $120 per cwt on a live basis, steady to up $9 from last week. Dressed-basis trading was seen at $175 to $190 per cwt, steady to up $5.
The USDA choice cutout Wednesday was down $5.43 per cwt at $404.04, while select was up $2.31 at $391.18. The choice/select spread narrowed to $12.86 from $20.60 with 99 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $126.89 per cwt, up $0.01. This compares with Wednesday’s May contract settlement of $126.00, down $1.42.