The DTN analyst team does a phenomenal job of keeping track of market moves and when records are broken. But given the recent turn of events, and the baffling twists and turns that the market has taken, reporting when boxed beef records are made has become almost a daily event.
Last week will go down in history and, sadly, not in a good way. Boxed beef prices continued their recent trend and soared higher: Choice cuts jumped $66 and select cuts jumped $59 in a matter of five business days. Then, on Monday, choice cuts jumped $27.25, pushing choice cuts to $404.70; select cuts gained $13.98 to $371.11. To add to the madness, last week's slaughter was horrifying. Coming in at a mere 425,000 head, last week's kill is the smallest on record since the report started in 1990.
If you do some simple math, you'll quickly see the problems our industry is facing multiply. In order to stay current and properly manage our fed cattle supplies, we need to process around 600,000 head of cattle each week. Last week's slaughter was shy 175,000 head from meeting that order. And last week wasn't the first week that we've been short of the 600,000 head. As each week passes, the countryside becomes more congested with fat cattle that have nowhere to go. The thing to remember is that those cattle didn't magically disappear. They are still sitting in feedlots, racking up feed costs and taking away feeders' opportunity to buy new calves as they lack space.
The sooner packing plants can open and run at full capacity the sooner we will see things start to turn around. But even when plants do open, our problems won't immediately be solved. As each week passes, more and more cattle are added to the backed-up supply chain. Opening plants and having them run at 20% capacity won't be enough -- in order to work through this mess, we need massive action taken. Plants will need to run two full shifts a day (hopefully, on Saturday too) in order to work through the chaos.
I pray that we get a vaccine that puts COVID-19 behind us and our lives go back to normal.
ShayLe Stewart can be reached at shayLe.email@example.com
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