A view from the US

Tuesday, 21 April 2020

Worries are increasing among all livestock producers about big mounting financial losses, with all groups – now including the National Chicken Council on behalf of breeding farms – clamouring for a share of $3 billion in product purchases announced by USDA-AMS.

NCBA estimates cattle producer losses to be near $13 billion (USCA separately sees near $15 billion) and they are pressing for reform of the cattle pricing system.

National Pork Producers Council claims hog producer losses stand at $5 billion and is asking President Trump to buy $1 billion of pork for US food banks. Lamb producers have long been pleading for hundreds of millions of dollars of USDA product buy-ups for charity donation.

Meat packer/processing companies are facing lost production (including plant closures) from COVID-19 disruptions – including growing numbers of work illnesses and absentees.

Retail food outlets are currently staying adequately stocked with meats and many other foods at varying prices – many much less than two weeks ago.

Foodservice and restaurant sales continue to be down, but US export sales are holding up well – raising hopes that it will help balance the loss of domestic sales.

Adding to livestock and chicken producer woes, southern states from Texas east to Georgia suffered big tornado damage over the Easter weekend, with further damage from storms this weekend.

Last week, cattle slaughter was estimated at 502,000 head – down from 642,000 a year ago and 23 per cent below late March. Fed cattle future prices fell by 0.85c Friday to 94.6c-lb.

USDA wholesale price estimates for six pork primal cuts had some wild swings last week, with bacon belly jumping from 30c-lb to 59c on Friday. Carcass cut-out value varied and cash prices for hogs bobbled during the week but fell overall. Urner Barry market report said pork carcass cut-out (wholesale value) was up 11.1 per cent, while hog values (packer costs) were down 15.7 per cent.

Following last week’s huge collapse to 50c-lb in USDA’s wholesale price index for whole broilers, there is still surplus supply and retail price discounting, but production cuts are occurring.

Reports also say that weekly US lamb slaughter has dropped to 29,000 head compared to 47,000 a year ago. The average carcass price is 325c-lb – down 375c on early this year. Media reports quote distressed lamb producers in Utah state saying their live lamb selling price needs to be 145c to break even with calls for a big tariff on lamb imports.

All animal species are currently seeing serious contraction of demand accompanied by reduced slaughter and production capacity – with no relief in sight. This has led to all livestock producer organisations pressing USDA for massive financial help.

The US Treasury has started sending money to consumers and businesses from its $2.2 trillion stimulus package to prop-up strapped budgets, with many small business owners wanting more after funds ran out. Many US consumers are cash-strapped and there are currently 22 million unemployment claims lodged in the past four weeks, reducing purchasing power. These negative trends are expected to continue in livestock and meat industries, especially with rising human health contingencies and retail meat prices are likely to increase modestly if US slaughter capacity keeps decreasing with plant closures.

USDA Secretary Perdue has promised cattle industry groups to start a serious investigation into complaints about cattle pricing systems, which recently caused them red ink while packers made big profits.