Does the beef industry need additional packer slaughter capacity? Recent history suggests cattle prices were highest when packing capacity utilization was lowest, but the answer is complex.
Cash cattle prices lost another $2 per cwt. last week, a decline of $7 over two weeks. Coupled with higher input costs on feeder cattle, the decline feedyards with an average $22 per head loss last week.
U.S. cattle slaughter was up an estimated 25% over the previous holiday-shortened week as beef packers gradually return to near-normal capacity utilization.
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Industry analysts say there is a 1 million head backlog of cattle waiting for a harvest slot, and working through those heavy front-end supplies could take months.
The unprecedented events surrounding the COVID-19 pandemic have led to a severe economic downturn and will impact livestock markets going forward.
The indefinite closure of Tyson's Holcomb, Kan., facility creates the potential the cattle "marketing pace will slow down and carcass weights will increase."
Profitability for both cow-calf and feedyards is projected to improve in 2021, Sterling Marketing president John Nalivka told AgriTalk host Chip Flory.