Analyst: Meat Demand Back in Play Due to COVID-19

Jim McCormick, hedging strategist with AgMarket.Net, walks through the impacts of COVID-19 on the current livestock markets and what to watch for in the coming week. 

“With a lot of people still kind of locked down due to the COVID-19 crisis, I would guess you’re going to see a lot of backyard BBQ,” says Jim McCormick, hedging strategist with AgMarket.Net. “Hopefully, that will bring some demand back in.”

McCormick says boxed beef cutout values are seeing more of a “normal price.”

The daily spot Choice box beef cutout ended the week on Friday, June 19 at $213.72 which was $16.92 lower compared to the previous Friday.  Last year, it was $219.82 on the same Friday.

“The boxed beef has definitely been on a wild ride, going [up roughly] $400,” says McCormick. “Now, it’s kind of come back to close to normal pricing by historical pricing, maybe even a little bit lower. That’s bringing the demand back to the marketplace.”

However, USDA’s Hogs & Pigs report showed an all-hog inventory rose to the highest ever. The market hog estimates were above trade estimates.

According to Pro Farmer, the beef cow slaughter into late March had been at a nine-year high. It offered some hints at herd liquidation before the pandemic slowed operations at processing plants in April and May. Beef cow slaughter has jumped back to multi-year highs as slaughter rebounded this month.

“The problem is, we backed so many cattle up, they are 40 to 50 pounds heavier. We almost have an abundant supply of protein right now. That’s become a problem.

Ultimately, McCormick says the pricing relies on exports.

“We have a little excess supply we need to get pushed off to the to the importing countries,” says McCormick.

Watch his analysis here.