Sort & Cull

It comes as no surprise to see meat prices rise as the disruption in the packing sector continues, but the exponential gains that the market has seen are truly unfathomable.

Just last week -- in a matter of five days! -- choice cuts gained $54 and select cuts gained $52. Never before has the industry seen such gains in such a short matter of time. And adding to the situation, Monday morning's boxed beef report showed that choice cuts gained another $14.38, pushing choice products over $3.00/hundredweight, to $307.75.

If the supply chain was working as usual and there was no other disruption in the marketplace, and consumers were just that eager to eat beef, producers would leap with joy. But knowing that the spike in prices is a mere reflection of a limited supply, producers are sickened to see such huge advancements in prices because they know it's a result of a broken system that will hurt more than it helps.

The pill that may be the biggest and hardest to swallow is that there is no shortage of supply in the countryside, only in the retail sector. As plants continue to be shut down due to COVID-19's impact, packers are limited to the number of cattle they can process.

Feeding cattle takes time, anywhere from six to eight months for cattle to carry the proper condition to slaughter, and now that plants are operating at such a minuscule level, feedlots are given few options. They must continue to feed the cattle they have ready to slaughter, which creates vast financial implications as more time and feed rake up more money and affect how the cattle will yield.

The problems that the industry now faces are bigger than we feared, and longer lasting than we'd like to admit. Getting packing plants up and running is critical for the beef industry.

Otherwise, we might see retail beef prices continue to rise but some ranchers sink deeper into a financial hole and find it much more difficult to climb back out.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

(ES/AG)

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