While June Cattle futures prices continue to trade at a steep discount to the cash market, slaughterhouse closures have kept the slaughter pace very slow, and cattle could quickly backup in the country.
The USDA estimated cattle slaughter came in at 85,000 head, yesterday. This brings the total for the week so far to 255,000 head, down from 284,000 last week at this time and down from 356,000 a year ago. Beef prices are up 19.6% in just one week to a record high, and this will give plants the incentive to try to catch up.
The record-high beef prices refer to the USDA Boxed Beef Cutout which is a wholesale price (on a dressed carcass basis that is formulated off of prices for various beef cuts) that is based on reported trades between packers and grocery store chains, food service companies and the like. Yesterday’s choice cutout value of $275.75 was the highest on record going back to at least 1987. The previous high was $265.59 from May 19, 2015.
Even with the surge higher in beef prices in March, cold storage data was considered bearish, as the industry did not pull beef from frozen stocks. It will be important to get slaughter plants up and running efficiently soon, as beef prices may get a further boost as restaurants reopen.
June cattle futures prices closed slightly lower on the session, yesterday, after the early rally failed to find new buying interest. Traders remain nervous with the large number of slaughter plants that are idled or closed due to virus issues with employees...
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