US beef sector to be hurt over the following months
The US meat industry has gone through the most challenging times in the last three months due to the impact of COVID-19 infections in the meat processing plants, argues a CoBank quarterly report. However, some of the sectors are performing well in the domestic market or abroad, while another one is to experience turbulent times ahead.
US chicken plants endured far less COVID-19 disruption in the second quarter than beef or pork. The chicken sector swiftly filled retail meat cases when demand shifted from foodservice and the red meat supply dropped. While chicken producers have been able to manage through their production disruptions, demand and prices have been volatile. CoBank analysts expect around 3% industry growth for the sector in 2020 as its value-proposition may appeal to US consumers facing a difficult economic outlook.
Beef packing plant capacity fell to historic lows in late April, spiking the cutout value to record highs. Beef production and prices have now returned to pre-pandemic levels. Concern within the beef sector is now shifting from supply to demand. Foodservice traffic has improved, but many social distancing restrictions remain. This means ongoing challenges for the dine-in, full-service sector, which especially hurts the beef complex.
The pork industry has rebounded from a supply chain shock that saw US production fall by nearly half, before climbing back to above prior-year levels two months later. Pork production in the last week of the quarter was up more than 10% above the same week a year ago as the industry is beginning to work through the backlog of hogs. Second-quarter pork exports remained strong and the trend will continue fueled by China's increasing demand for pork, says the report.
Nevertheless, the economic evolution in the following months will dictate over consumer's behaviour in the US meat market.