– Dr. Kenny Burdine, Livestock Marketing Specialist, University of Kentucky
Slaughter volumes have continued to be an issue and concerns over short-term meat supply have grown. Last week, I discussed heavy slaughter volumes in March and how that had led to increased quantities of beef in cold storage. While this is a significant development, the decreases in slaughter that we saw starting the second week of April have been large enough that they will lead to noticeable differences at the retail level.
Markets did react somewhat to President Trump’s announcement that meat processing facilities would be considered critical infrastructure under the Defense Production Act. This definitely has the potential to increase slaugther. And, margins in the meat packing sector are high enough that processors have a lot of incentive to do that. I would point out that while this may bring some processors back on line, I still expect many to operate at lower capacity due to safeguards they have put in place. So, while I think there is potential for this to help us work through mounting cattle supplies, I still think it is going to take a long time for us to get caught up.
For the week ending May 1st, marketings continued to be light and Kentucky prices had a slightly a softer undertone. On a state average basis, 550 lb M / L #1-2 steer calves stayed in the very low $140’s per cwt, which is almost exactly where they were last week. The price of an 850 lb M/L #1-2 steer at Kentucky auction markets decreased by $2-3 per cwt, but I don’t see that as indicative of the overall market. It was primarily due to a decrease in prices on the upper end of that weight range from the previous two weeks. And, this decrease was not noted in auction-by-auction market reports throughout the week. Figure 1 shows updated weekly charts for both feeder steer price series for 2020.
Figure 1:
Some individual market reports throughout the week referred to slightly lower cull cow prices, but steady slaughter bull prices. On a state average basis, this was reflected as cull cow prices fell $2-3 per cwt. While I am showing average dress 80-85% boning cows below (see figure 2), I would also point out that the upper end of the cull cow market was also lower this week. Still, a market where most cows are in the mid-$50’s is considerably above 2019 levels.
Figure 2:
