The Covid-19 Coronavirus dominates the news, prompting state and local governments to shut down commerce and ordering residents to shelter in place. The US economy has been hit with blunt-force trauma, from which it may take years to recover fully.
Protein markets were hit with a demand surge that emptied the meat cases of local supermarkets while leaving restaurant owners to hear only crickets. It looks now like grocers are catching up as the pace of sales slows. USDA data says there is plenty of meat in the US; it just isn’t in the right spots.
To assess the situation and provide some insight, Urner Barry Comtell analysts issued a special Coronavirus report, from which this newsletter draws heavily.
BOXED BEEF
Gary Morrison, vice president and red meat reporter for Urner Barry, said cattle futures prices fell faster than the cash market for wholesale beef. Part of the function of the futures market is to guess where prices could be at some point in the future and trade on those assumptions, fears or expectations.
Some of the fear in meat markets has been linked to the “what if” a plant or plants had to close because Covid-19 showed up among the employees. Tyson’s fire at its Finney County, KS, plant last year provided a look at the market shock of a plant being pulled from the production mix suddenly.
Wholesale prices for most items moved higher, with some sharp increases.
However, in the latest week, wholesale beef prices have calmed, and some market analysts now say the surge likely is over, and that with plenty of meat worldwide, it will be hard to maintain beef or cattle prices in coming weeks.
BONELESS BEEF
Bill Smith, Urner Barry director and red meat market reporter, said the US boneless beef market has undergone significant changes as the virus has affected the lean and fat trimmings markets in different ways.
The leaner boneless beef market continues to outperform recent years, but prices dropped in February. Panic retail buying in March helped push prices of domestic and imported beef back up.
The market for fresh 50% lean beef started 2020 strong but floundered in February and March, likely as major sporting events were cancelled. Foodservice also took a hit as businesses closed and travel restrictions were put in place.
Another market analyst said prices for these items may turn higher again if travel restrictions are lifted and people can gather for meals, especially around a grill.
PORK
Urner Barry Director and Pork Market Reporter, Russell Barton, said pork markets have gained across nearly all categories, except for bone-in hams. Retail products have fared better than those at foodservice outlets, although some cross-over cuts have performed well.
And, as social and commercial restrictions cast shadows over foodservice, pipeline flows have slowed and do not bode well for mid-term sales. The lack of sporting events has cut hot dog and sausage demand, not good for processed products.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains last week at $118 to $120 per cwt on a live basis, up $6 to $7 from the previous week, and at mostly $190 on a dressed basis, up $5 to $10.
The USDA choice cutout Monday was down $1.87 per cwt at $250.97, while select was down $4.24 at $238.14. The choice/select spread widened to $12.83 from $10.46 with 104 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $132.57 per cwt, up $2.13. This compares with Monday’s Apr contract settlement of $120.05, down $0.55.