Beef Market Update: Demand curve struggles, even as processing capacity returns to "normal"

Looking back even just six weeks ago, few would have thought it would be possible to be back at the cattle processing levels that we currently are in Canada and the U.S.

Anne Wasko, of the Gateway Livestock Exchange, says that many changes have occurred over the past few weeks during the face of COVID-19. The worst of the worst was in late April and early May, and since then, things have gotten back to “normal” — or close to.

“The recovery in terms of these plants getting their kills back is 93 to 95 per cent of normal, depending on what country you are talking about. It’s been absolutely amazing,” Wasko emphasizes in this weeks’ Beef Market Update.

Although we are headed back to normal, the real question is where we are at with the backlog. Is it as bad as many have predicted it would be?

“The cattle that we did not process in both the U.S. and Canada — and the hogs as well, because the hog sector is in the same boat — don’t go away. So the fact that we’ve got those kill levels back to pretty close to 95 per cent of pre-COVID-19 numbers, we still have to deal with that supply through that period of time,” Wasko explains. “The U.S. has estimated that number to be around 1 million head, with lots of estimates on either side of that, and here in western Canada, the estimates are around 100,000 head. So yes, that backlog still exists. It gets stretched out as cattle get moved around, in terms of slowing down, or their gain or what their target dates are going to be for ready for slaughter. But they are definitely still there. The cattle aren’t gone.”

The boxed beef prices have continued their decline. Wasko says at this point in time, a person almost has to get updated daily, because of how quickly the prices are continuously changing.

“[Thursday afternoon] the choice cutout was at $213. Big kills mean lots of beef now getting turned out. It’s not the storyline we had we had in the media a few weeks ago, with a lack of beef. Today there is lots of beef, and of course the markets are trying to find that demand. We still don’t have things back to normal in terms of foodservice in terms of the U.S. or Canada, and even if you are open, its 50 per cent capacity. These pieces have really impacted the demand side. And that continues to be a concern.”

Check out the full Beef Market Update with Anne Wasko and RealAgriculture’s Shaun Haney, below:

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