Increased meat demand in the face of stay at home orders, and the higher livestock prices it brought couldn’t be maintained heading into this week. Fed cattle cash prices are $7.00 to $8.00/cwt. lower this week. Cash hogs are $3.00/cwt. lower. It can be difficult to answer questions regarding steep declines in cash livestock prices when some consumers are still seeing empty meat cases at their local grocery stores. Senator Charles Grassley from Iowa has asked the Justice Department and the USDA to look into the drop in live cattle prices. It’s difficult to piece together information to get a larger view of the current market situation, especially when the entire meat supply chain is dealing with challenges never seen before.
The lower cash prices reflect a change in short-term consumer demand. Main Street Wisconsin meat processors, for instance, are reporting continued demand for ground beef, chicken breasts and sausage. Demand for whole muscle cuts, especially the more expensive loin cuts, has dropped dramatically. Farmers who direct market meat are reporting an increased number of calls from people looking for ground beef as well, and fewer people looking for higher priced cuts. It’s not clear if demand for ground products, chicken breasts and sausage is driven by cost, or if consumers are more comfortable cooking those products at home.
With packers receiving fewer orders for beef and pork muscle cuts, cash prices dropped at auction markets this week. It’s unlikely prices will recover until a more predictable consumer demand pattern emerges. Restaurant closures have compounded the problem, noticeable in the lack of demand for items like bacon. Pork bellies had been the highest priced part of the market hog, but now are a drag on hog value. Packers have indicated that variety meat export demand has dropped as well, further decreasing the price they’re paying for livestock.
Adding to the frustration of livestock producers is the number of stores posting signs telling customers to expect price increases for meat and dairy products due to tight supplies, and in turn limiting purchases of those products. Some, but certainly not all wholesalers and distributors are increasing prices. One Wisconsin meat processor said distribution companies that normally rely on foodservice accounts have not raised wholesale prices, and have, so far, been able to supply his business’s needs.
The USDA export numbers for last week showed sales of beef at 18,200 metric tons, and 38,200 metric tons of pork sold to foreign buyers. China did buy U.S. pork again, accounting for 18,900 pounds of the total. China was also a buyer of U.S. soybeans. South Korea purchased both beef and pork. The export figures are respectable, and an increase over recent weeks, yet still not enough to offset inconsistent domestic demand.
Increased unemployment will continue to hurt red meat demand due to decreased buying power. A record 6.6 million Americans filed for unemployment last week – beating the previous record of 3.28 million set the week prior. Unemployment numbers reporting is somewhat delayed, and with claims still being processed, it’s expected claims will reach 10 million as early as next week. Many will return to work in their service industry jobs when deemed safe to do so.
The USDA released a Prospective Planting report on Tuesday (March 31.) Wisconsin farmers are planning to plant 3.90 million acres of corn this spring, 100,000 more acres than 2019. Intended soybean acreage is 1.95 million acres. If realized, that would be an increase of 200,000 acres over 2019 and would be the fourth largest soybean acreage in the state’s history. Nationally, corn acreage is expected to be 8 percent above last year. Soybean acres planting is expected to be 10 percent higher than 2019.
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