COVID-19 has impacted everyone – corporations, small business owners, families and neighbors. Livestock markets have plunged under the weight of the pandemic, and the economic fallout across the industry has been troubling.
Prices have somewhat stabilized over the first couple weeks of May, according to Tim Petry, NDSU Extension livestock economist, but the overall numbers haven’t been pretty to look at since they started crashing in mid-February.
“Everything – cattle, hogs, lambs – has experienced big problems, especially at the packing plant level with closures,” Petry said. “Some are opening now, but they’re really struggling on capacity. That’s really hurt all the markets, particularly in our area – North Dakota, Minnesota, South Dakota and Montana.”
On the slaughter side of the livestock market, at least for cattle, hogs, and sheep, Petry says it’s been difficult to even get bids throughout the region, despite the fact that there are prices being quoted.
“There’s a wide range of prices across the U.S. from where packing plants are open and need livestock compared to other areas where those services are closed. It’s especially tough on producers who have market-ready livestock,” he said.
On the feeder cattle side, prices are well below expectations.
“I just look back to when this thing started in mid-February and compare them to what prices are now, and while they’ve come back a little bit from their lows a few weeks ago, we’re still down $15,” Petry said. “There are still auction markets operating – not all of them, but some. Feeder cattle are still moving. There’s still a market for them, particularly in those Nebraska and South Dakota feedlots, they’re still buying cattle, so at least we can find a home for those animals unlike with the slaughter livestock in many cases.”
One of the toughest parts of the pandemic and its impact on the economy is the fact that it’s tough to see the finish line – a moment where things will return to “normal.”
“It’s a complete nobody knows,” Petry said. “To think there’s going to be a quick rebound is just not in the cards. We’re experiencing a lot of problems and it’s a real struggle. If they found a vaccine in the next couple weeks and everyone got vaccinated, sure, that would make a big difference, but that’s not likely to happen.”
Petry says livestock producers need to operate under the impression that they’re going to struggle with lower prices for the next several months for sure, maybe longer.
“They’re starting to open up the country. For the meat industry, about half of our product goes through the restaurant and hotel industry, and that’s been really restricted the last couple months. We’ll see what happens, but from a planning standpoint, we have to plan for lower prices,” he said.
Throughout the region, Petry says a lot of last year’s calf crop has been sold already.
“There’s still some left to sell, but we’re quite a ways off until fall calf prices, so that gives us some time for the restaurants to open up and so on,” he said. “We have to hope for the best and plan for the worst. We need to plan this fall for 10 percent lower calf prices than we had last year and hope they’ll do better than that. It turns from a marketing strategy to a financial strategy of working with lenders to make sure we’ll be in business.”
In the case of the heavyweight feeder cattle that are now 700 pounds or more, Petry says there is still demand for those animals, however, there could be some downside risk because nobody knows how the packing plant situation is going to evolve.
“Unfortunately, we just have to move them at a lower price,” he said. “As for calves, as long as we have good weather, we can buy time and get those calves into November/December and see what’s happening and maybe things will be better. There’s a lot of uncertainty there.”