AUSTRALIA, North Sydney. Just one month-ago, US markets witnessed the biggest rally in the beef cut-out value (a benchmark indicator of wholesale prices) in history, triggered by an unprecedented surge in retail meat demand as consumer panic buying set in. Processors responded to price signals and supply ramped up to meet demand. Markets subsequently calmed.
However, now a new panic has set in, as Covid-19 has forced further processing plant closures. Early data suggests US weekly cattle slaughter last week was 29% below the peak five weeks ago and 27% below the same time last year, according to Steiner Consulting. The is a monumental turn around in supply. The supply shortage of product coming through the chain has sparked an even greater rally in the US cut-out value, increasing 46% over the fortnight to Tuesday and making the March rise look like a minor speed bump.
US beef processors are playing a delicate balancing act, trying to keep plants open to meet the obvious demand while taking sufficient measure to protect employee health and safety. The squeeze on processing capacity has simultaneously pressured cattle prices lower. US imported beef prices are yet to register a similar magnitude rally as domestic wholesale values.