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Beef Buzz News


Economic Analysis Shows Beef and Pork Prices Negatively Impacted by Temporary Plant Closings

Mon, 13 Apr 2020 10:15:34 CDT

Economic Analysis Shows Beef and Pork Prices Negatively Impacted by Temporary Plant Closings The temporary closing of two beef (JBS) and pork (Smithfield Foods) processing plants prompted Dr. Glynn Tonsor, Kansas State University livestock market economist, to study the impact of on cash beef and pork prices. Tonsor worked with Dr. Lee Schulz, livestock economist for Iowa State University Extension and Outreach, to forecast cash prices resulting from the shutdown.

It is always a delicate balancing act between available supply and processing, Tonsor said. This has been exacerbated by the COVID-19 sickness forcing processors to close plants to protect workers.

"If we have 20 percent lower utilization of available plants, taking that much offline," Tonsor said, "we project that's a 27 percent reduction in fed cattle prices."

The picture is even more bleak for pork producers.

"That same 20 percent reduction in plants is a 36 percent reduction in pork prices," Tonsor said.

The difference in reductions, Tonsor said, is because there is more flexibility in the beef market, as the hog market is more time dependent.

He emphasized both are perishable products and this is not sustainable for very long.

Tonsor said it was impossible for the two economists to analyze precisely how much of the plant reduction was already factored into the market.

Interestingly, Tonsor noted price forecasts by the Livestock Market Information Center have been adjusted downward from January predictions, but more optimistic than the futures market is now indicating.

Click on the LISTEN BAR below to hear more comments from Dr. Glynn Tonsor's recent webinar presentation.

The Beef buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.


   
   

Ron Hays Beef Buzzes With Dr. Glynn Tonsor
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