Bottleneck in the Beef Supply Chain –

Several major meat packing plants have had to reduce production capacity because workers are being infected with the coronavirus.   It is believed that much of the transfer of this virus takes place when workers get together after work.   One packing plant in Colorado has 6000 workers that speak 23 different languages.   I’m sure it is difficult to get some of the workers to understand the importance of social distancing.

When production capacity at the packing plants is reduced, a bottleneck is created.   Fewer and fewer cattle are able to be slaughtered when they should be.   That creates a buildup of cattle – which will lower cattle prices all the way back to the cow-calf sector of the beef industry.   It will also create a shortage of beef in the grocery stores – which will cause beef prices to increase.

Beef producers need to carefully consider their options.   I know of several producers who have decided to hold on to their calves and/or yearlings – thinking the market will improve.   The cattle market WILL improve – but I don’t know if it will improve soon enough to do any good for those holding onto their calves and yearlings.   If you don’t have the grass to support extra cattle, your situation will just go from bad to worse.

Calves, feeders and cull cows are still being sold at local auction barns across the nation.   Considering the circumstances, I believe the prices are very respectable.  What if the market gets worse before it gets better?   I think there is a high probability of that happening.   As Bud Williams once said, “You will never go broke having too much money or too much grass – but going broke is easy if you have too many cattle at the wrong time.”

Believe it or not… many producers are currently receiving record-high prices for their cattle.   Pharo Cattle Company has many customers who produce and market grass-fed beef.   All of the grass-fed beef producers I have visited with tell me business is booming as never before.   They are selling all they can produce at premium prices.   Some are aggressively looking for new sources of cattle with the right genetics.

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