The Choice boxed beef price dropped to $200.47 per hundredweight on July 17, the lowest Choice boxed beef price since December 2017. Both supply and demand factors are at work pushing wholesale beef prices lower.

No segment of the cattle industry has been spared from the uncertainty and turmoil driven by COVID-19. However, the dynamics for the slaughter cow market have been a little different than those for the live cattle coming from feedlots that have garnered the most discussion due to plant disruptions.

In first-quarter 2020, beef production reached record levels on the largest number of cattle slaughtered for the quarter since 2002 and the heaviest dressed weights since 2016.

Barring a major setback, it appears that beef markets are moving past the worst of the disruptions that have caused upheaval is recent weeks.

The spread of COVID-19 has caused shifts in the beef demand structure; coupled with global economic uncertainty, it is affecting the entire beef supply chain.

A report from the Centers for Disease Control and Prevention (CDC) released May 1 says 4,913 cases and 20 deaths have occurred among some 130,578 workers at 115 meat and poultry processing facilities in 19 states. 

Estimating the total economic effect of the COVID-19 pandemic on the economy and the beef industry requires a number of assumptions based on imperfect information. As a result, any economic impact forecast has a wide confidence interval which can only narrow as the pandemic abates and post-quarantine economic data become available.

Falling cattle prices and both market and consumer unrest has increased the pressure from beef industry groups and lawmakers on the USDA to increase their investigations into the cattle markets.

The 2020 beef production forecast for 2020 was raised by 240 million pounds to 27.7 billion pounds from the previous month. This increase is based on the pace of fed cattle slaughter and heavier expected cattle dressed weights.

Economists often say that market prices are determined by demand and supply. What they really mean is more correctly stated as “market prices are determined by expectations of demand and supply.” Under more stable and normal circumstances, this distinction is not particularly significant.