Market rebounds: Despite COVID-19 impacts, resilient beef markets rebound to year-ago levels
The year 2020 has been unprecedented in almost every way possible. Yet, despite wiped out grocery shelves, packinghouse closures and a series of market disruptions, beef demand has remained resilient, and markets have almost completely rebounded to year-ago levels, according to Dr. Derrell Peel, Oklahoma State University Extension livestock marketing specialist.
“We have been through a lot this year, including a tremendous set of shocks and challenges in the agriculture industry in particular,” Peel stated during the virtual Cattle U and Trade Show, presented by High Plains Journal, Sept. 8-11.
“However, we are starting to see things settle down. I’m not going to say we are back to normal, because who knows what normal is going to mean in the future, but we are seeing markets stabilize,” he continued, noting several sectors of the beef industry have almost rebounded to near year-ago levels.
Current cattle market
According to Peel, July 1 inventory was unchanged for all cattle and calves from a year ago.
“Beef cows were down nearly 0.8 percent at the beginning of the year and again in July, which is similar to year-ago levels,” he stated.
“Every part of the industry has been through enormous dynamics this year. We had a traumatic disruption in April and May, causing a sharp drop in production, then it bounced back in June and July,” Peel adds, noting several other sectors in the cattle industry saw this trend and are now on the way to recovery.
As far as calf prices go, Peel noted the first half of the year saw a lot of volatility.
“Calf prices saw all kinds of challenges this spring, but they have been recovering through the summer,” he stated. “This recovery may not seem very noticeable – it has been a slow grind.”
“The recovery of feeder cattle prices on the other hand, has been a little more obvious,” he added.
Peel explained both the calf and feeder cattle markets are close to where they were this time last year.
“It isn’t a lot to brag about because the second half of last year, particularly from a calf market perspective, was pretty disappointing,” he said. “But, given everything we have been through and everything we are still working through, we are beginning to see a little more normalcy and stability.”
Similar to many sectors, Peel noted the fed cattle market has been widely variable this year, with several distinct ups and downs.
“Facility shutdowns and the slowdown of production cut a pretty big hole in the fed cattle market,” he said.
Although he noted the particular market has started to make its own comeback, he also pointed out there is now a seasonal weakness looming ahead as consumers switch from summer grilling markets to fall and winter meat markets.
CattleFax also notes, despite the continuing recovery of the market, the Oct. 1 inventory of fed cattle will likely be down as much as three percent compared to year ago levels.
“Boxed beef markets saw tremendous shocks in the second quarter as we went through a whirlwind of market disruptions,” said Peel. “There was a really sharp decline in this market, but it has gone up just as dramatically as it fell down. Therefore, we are close to where we were this time last year.”
According to Peel, the cull cow market has remained fairly strong through the summer months, relative to a year ago.
“However, we can expect a sharp seasonal low as we move into late October and early November,” he stated.
According to Peel, year-to-date total cattle slaughter was down 4.2 percent, with bulls down 4.2 percent, dairy cows down 4.4 percent, heifers down four percent and steers down 5.7 percent.
“At this point, beef cow slaughter is about 3.3 percent above a year ago,” Peel says. “We can’t predict everything that will happen in the next few weeks, but beef cow slaughter will probably end up closer to unchanged by the end of the year.”
Peel notes carcass weights are much higher this year than previous years, most likely due to the backlog in cattle numbers caused by processing facility shutdowns in the wake of COVID-19.
“My prediction is carcass weights will stay around 20 pounds above last year’s,” he says. “This is contributing to year-over-year increases in beef production, and we will be seeing larger beef production numbers through the rest of the year.”
In fact, Peel explains 2020 predictions estimated beef production to be 27.4 billion pounds, and current numbers are one percent above this estimation – making 2020 a record year for beef production.
Hannah Bugas is the managing editor for the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.