The value of beef cutouts has reached record highs over the last few days, as packing plant capacity has been reduced by shutdowns in the U.S. and Canada.
At the same time, those shutdowns have put immense pressure on cash cattle prices.
“In the U.S. for the cash cattle that are trading, they are going to manage around 96 cents the U.S., which is about $8-9 lower than we would’ve seen a week ago. At the same time, the choice cutout is moving into record highs,” explains Anne Wasko of Gateway Livestock in this new Beef Market Update. “Last night we were looking at $284, which is $48 higher than last Thursday. This morning it was up over $290. So these are all-time records that are directly related to the reduced slaughter that is going on out there.”
When you look back a few weeks ago, there was lots of talk in the industry where people where talking about a sub-200 number in the short term for cutout prices, as consumers began to realize their freezers were full. So why did it go in the other direction? Wasko says this is due to an underestimation of how much packer capacity would actually be constricted.
“From what some of those earlier estimates were on the expectations on what some of the expectations were going to be for slaughter levels through April, we’ve seen significant reductions from that. Lots of plants are being impacted — whether we are talking beef, pork, poultry — right across the U.S. and Canada,” she explains. “It’s been bigger than I think any of the estimates were even just two weeks ago.”
Wasko notes that estimates for U.S. cattle kills for this week are 460,000, whereas the previous week was 502,000. If we take a look at a year ago, it was significantly higher, at 640,000.
Check out the full Beef Market Update with Anne Wasko and RealAgriculture founder Shaun Haney, below: