Peel: Beef Market Impacts from COVID-19 Vary Widely
Wholesale
and retail beef markets have endured enormous upheaval since mid-March.
Starting March 16, the surge in retail grocery buying put huge demands
on retail supply chains resulting in dramatic and immediate spikes in
wholesale beef prices. As shown in Table 1, the overall cutout jumped
by nearly 19 percent in a matter of three days. Wholesale prices
continued to push higher until March 23, peaking at $257.32 cwt., up
23.6 percent from March 13 levels. Since then, the cutout has dropped
over 10 percent to $230.44/cwt. on April 3. It is not clear exactly
where the boxed beef cutout will settle out in the coming days. At the
same time, the demand for food service has dropped sharply leading to a
diverse set of impacts on various wholesale beef cuts.
Table
2 shows the changes in weekly wholesale beef product prices since early
March. Middle meats, which are dominated by restaurant demand, have
dropped while end meats have surged on grocery demand. Prices for most
steak items are lower including the tenderloin (189A), down 29 percent
and ribeye (112A), down 7.7 percent since early March. Prices for the
Petite tender (114F), a popular restaurant item, is down over 32
percent. Short ribs (123A), a popular export item, are down 47 percent
in price. Prices for loin strips (180), a popular summer grilling
steak that is normally increasing seasonally at this time, is up over 22
percent. Top sirloin (184), is a multi-purpose steak is used in both
restaurants and at retail grocery, is priced nearly 13 percent higher.
At
the same time, end meat prices, which are typically declining into the
summer, are higher driven by grocery demand for value cuts and ground
beef. Prices are sharply stronger for the shoulder clod (114A), up 49
percent and Chuck rolls (116A), up 32 percent along with Round items
including the Top round (168), up 33 percent; outside round (171B), up
47 percent and eye of round (171C), up 25 percent.
Fast
food restaurant demand is down, despite drive-thru service remaining
open, resulting in less ground beef demand. Prices of fresh lean 50
percent trimmings, mostly used for food service ground beef demand are
down 50 percent to the lowest level in 18 years. Fresh 90 percent lean
trimming prices are up nearly 8 percent on indications that imported
lean trimmings dropped in March. Grocery demand for ground beef is up
as noted above; however, ground beef at retail more commonly uses chuck
and round items rather than trimmings.