US live cattle futures plunged last week to levels not seen since the 2008-09 financial crisis as impacts from the coronavirus pandemic are being realized.
Livestock traders continue to exhibit concern that uncertainty for meat demand is a full year story as restaurants remain closed, and meatpacking facilities have shuttered operations leaving farmers with overcapacity among herds.
Over the next 6-8 months, some form of social distancing will remain in place that will likely result in operation limitations for restaurants, plus consumers will live in fear of going out to their favorite eatery as there is still no adequate virus testing for the entire population and no proven vaccine. Also, concerns of a second virus wave materializing in the fall will keep people confined to their homes.
The closure of meatpacking plants has weighed on spot cattle prices as the rash of COVID-19 outbreaks at dozens of meatpacking plants across the country has quickly transformed into a crisis.
Around 150 of these facilities operate within counties where virus cases and deaths are exceptionally high.
A virus outbreak has been reported at many of these plants, resulting in the closure of at least 10-12 in April.
Every virus-related closure limits the ability for farmers to sell their animals and leads to overcapacity of herds at farms that now have to be culled.
And while spot cattle prices are dropping, food prices are soaring. This dynamic has been explained in a prior piece titled "Hog-Culling Next As Meatpacking Plants Shutter Operations Stoking Food Shortage Fears In Weeks."
The Food and Agriculture Organization (FAO) US Meat Food Price Index shows a surge in prices started around the trade war and has continued through the pandemic.
Farmers crushed under the weight of plunging spot prices and consumers stressed over rising food prices as the economy crashes into depression during a pandemic is a powder keg of social instabilities ready to ignite.