Call the Market

Cattlemen Fear Lousy Processing Speeds Could Be New Standard

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
All eyes will be on June in determining if this labor shortage and a lack of necessary throughput is here to stay long term or if it's a challenge that will combatted. (Photo by Tom Stromme)

The issues overwhelming the cattle market regarding insufficient processing speeds have become a talking point that all are familiar with.

It's hard to ignore the blatant disconnect of profitability and proper throughput in the cattle market when packers' margins have rallied those of 2020. However, the cash cattle market has yet to rally above $122 in 2021, and consumers are seeing ungodly meat prices at a time when there's no shortage of beef. It would be careless not to mention that this past week, at Joplin Regional Stockyards, slaughter bulls were testing the high end of the market at a jaw-dropping $119/cwt, which is nearly equivalent to last week's fat cattle market.

So, what's the problem? Is it that packers are truly unable to find the labor, or is it simply a matter of greed? Looking at the two possibilities as fairly as one can, I think the truest, most unbiased answer will come from June's processing speeds.

Looking at historical processing data, June has been a time when the industry expects large kills throughout the month. Based on current actual slaughter data, we know that packers can process more than 670,000 head of cattle a week right now. For the week ending May 22, 2021, actual slaughter data shared that there were 672,197 head processed for that week. So, the issue isn't whether or not it can be done, the issue, once again, is a lack of consistency.

Putting June's importance into perspective, in 2018, for the week ending June 9 through the week ending June 30, the industry was able to slaughter 2,616,141 head, and averaged 654,035 head over the course of four weeks. In 2019, for the week ending June 8 through the week ending June 29, the industry was able to slaughter 2,672,253 head and averaged 668,063 head over the course of four weeks. Even in 2020, from the week ending June 6 through the week ending June 27, the industry was able to slaughter 2,582,834 head and averaged a processing speed of 645,708 head over the course of four weeks.

It's undeniable that the processing speeds thus far in 2021 have been inadequate, and if speeds aren't heightened in June, the market will be plagued with ample front-end supplies and the cash cattle market will be pressured from not only weakening boxed beef prices, but also from exuberant supplies.

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

ShayLe Stewart