Nalivka: Unprecedented Events

How will COVID-19 impact beef demand?
How will COVID-19 impact beef demand?
(FJ)

The opinions in the following commentary are those of John Nalivka, President, Sterling Marketing, inc., Vale, Oregon.

The $20 trillion U.S. economy was strong as 2020 began. It has been for the past 3 years. With the onset of COVID-19, that situation changed drastically. The often-repeated statement is that the U.S. economy is headed for a depression as the result of COVID-19. I would challenge that statement and rather than saying the current economic situation is the result of COVID-19, I would say the American public and the economy is in a severely stressed situation as the result of the decisions surrounding COVID-19.   

The economy’s performance prior to the outbreak of coronavirus was running on all eight cylinders. We didn’t slip into a recession as the result of a cyclical business downturn. Rather, it was the result of Americans becoming unemployed as the result of business closures and social distancing as the result of coronavirus posing a significant and perhaps unprecedented disruption to the economy. Again, this is not a result of the business cycle. 

“Unprecedented” is the term is used to describe an event that has never happened before. I don’t use that term lightly, but I would say that when entire cities and businesses are shut down, the word unprecedented is a fair description. Subsequently, those events have led to a severe economic downturn and changed people’s behavior which brings me to the topic of markets.

Analyzing markets and projecting prices in the current environment is definitely challenging. However, I will not go so far as to use the term “unprecedented.” I think the term “uncertainty” more aptly describes the market outlook.

Consumer behavior has become very disrupted and unpredictable. Hoarding may be a normal response to being told to stay at home, but now the question is what will be the tone of consumer buying behavior once the incidence of coronavirus has peaked and begins to decline? Further, when will that “curve flatten” as the experts say and a decline be firmly in place? Those are the key demand-related questions that will shape the market going forward. And that discussion is only further frustrated with regard to the question of opening restaurants.

Supply is one issue. We do a pretty good job of analyzing and projecting that number. Certainly, record beef, pork, poultry production, individually and in total, this year is likely if not highly probable. I am projecting total meat supplies to reach over 228 lbs. per person and the highest since 2007 when that figure was 221 lbs.

Production may be unprecedented this year setting a new record. But demand is the central factor in regard to prices going forward. From that perspective, it may well be “unprecedented” when the lives of U.S. and global consumers return to “normal”.

Related stories:

Nalivka: Let's Talk Packer Capacity

 

Latest News

Biden Administration Restores Wildlife Protections
Biden Administration Restores Wildlife Protections

The U.S. Fish and Wildlife Service plans to reinstate rules protecting endangered plants and animals, action that would reverse changes made during the Trump Administration that weakened the Endangered Species Act.

Across Breed EPD Adjustment Factors
Across Breed EPD Adjustment Factors

EPDs from multiple breeds can be compared by adding/subtracting the appropriate adjustment factors to the EPDs resulting from the most recent genetic evaluations for each of 18 breeds.

APHIS Now Thinks Wild Birds Are to Blame for Highly Pathogenic Avian Influenza's Arrival on Four U.S. Dairies
APHIS Now Thinks Wild Birds Are to Blame for Highly Pathogenic Avian Influenza's Arrival on Four U.S. Dairies

The livestock industry continues to grapple with the first confirmed cases of HPAI in cattle, while federal and state agencies continue to assure consumers there's no concern about the safety of the U.S. milk supply.

Skills Survey Reveals U.S. Agriculture & Food Industry Workforce Needs and Gaps
Skills Survey Reveals U.S. Agriculture & Food Industry Workforce Needs and Gaps

U.S. employers report challenges in finding suitable job candidates with work-ready skills to fill open roles in ag. The AgCareers.com U.S. Skills Survey offers insights, data and trends to address skill development.

USDA Authorizes CRP Graze and Hay Donations to Wildfire Victims
USDA Authorizes CRP Graze and Hay Donations to Wildfire Victims

Conservation Reserve Program (CRP) participants can donate emergency grazing authority to ranchers in Nebraska, Oklahoma and Texas impacted by recent wildfires.

New Guide Helps Producers Maximize Values of Cull Cows
New Guide Helps Producers Maximize Values of Cull Cows

A new resource developed by the National Cattlemen’s Beef Association and CattleFax helps cattle producers maximize profitability from their culling decisions.