SCHWERTNER — Business is booming at Capital Land and Livestock, where cattle sales are abundant as Texas consumers stock up on beef during the coronavirus crisis.
“Cattle sales are going good,” said Jim Schwertner, CEO and president of the Williamson County-based livestock business, one of the largest cattle dealers in the nation. “There’s some areas that have slowed down, but we’re staying busy here.”
Texas consumers will see lower beef prices as a result of abundant cattle stock, Schwertner said, but the effect will likely hurt beef cattle producers.
“It’s bad news for producers, but great news for the consumer,” he said. “There’s going to be an oversupply.”
Texas appears to have an abundance of beef cattle as other parts of the nation deal with shortages because of outbreaks of the coronavirus among workers at U.S. meat processing facilities have closed plants and led to slightly higher prices in some parts of the country.
David Anderson, a Texas A&M AgriLife Extension economist in College Station, said meat prices should fall as the costs of production — lower fuel costs, processing and distribution — should affect prices.
But so far, prices on products like beef have surged at grocers dealing with high demand, he said. Prices for wholesale choice beef was up 25 percent from $2.05 to $2.57 per pound.
“That is all driven by grocers and all their purchases to keep with these rushes on products,” Anderson told AgriLife Today. “They will come back down as purchases slow down and some calm returns of when people have filled their freezers and feel they don’t need as much meat.”
Range of markets
The ripple effect of higher beef prices at grocers hasn’t reached beef cattle operations, Anderson said, because of changes in the range of markets that utilize different cuts from beef, pork and poultry.
Prices for “high value” animal cuts like filets in beef will go down as “lower value” cuts like chuck and round that go to ground beef stay static or go up due to demand, Anderson said.
Jody Thomas, co-owner of the Waco Livestock Commission, which conducts cattle sales and auctions, said cattle prices fallen in the past two to three weeks.
Cattle producers had been receiving about $1.23 per 100 pounds of cattle and that rate has dropped recently to $1.05 per 100 pounds of cattle, Thomas said.
Calves go for even less, he said.
“You can’t get a lot for the smaller calves,” Thomas said.
Anderson agreed: “Cattle and calf prices are a real challenge now. The grocery store stampede has caused a lot of unexpected beef buying, driving up wholesale prices, but the market has plenty of cattle available.”
The coronavirus has slowed down meat processing, Anderson said, as workers have been out sick, and at least one smaller plant in the eastern U.S. closed due to the large number of illnesses among its workforce.
“Calf prices are feeling the pressure of what the fed cattle market will be in August or October when they might finish,” he said. “Ranchers have some decisions to make, but they also may have the luxury of a little time to make them.”
Despite market fluctuations, industry producers said there is enough meat for the nation.
The U.S. Department of Agriculture reported that the 502 million pounds of beef in warehouse freezers was up 2 percent from the previous month while the amount of chicken in storage dropped slightly to about 921 million pounds.
Chicken plants closed
Chicken shortages could result since Tyson Foods ran a full-page advertisement Sunday in the New York Times and other newspapers that outlined the challenges of producing meat while shuttering some plants to keep more than 100,000 workers safe.
“This means one thing — the food supply chain is vulnerable,” the statement said. “As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain.”
Meanwhile, Thomas said he and other producers are doing their best to stay in business during coronavirus.
“I’d say 75 percent to 80 percent of producers are hurting,” he said. “We’re doing our best just to hang in there.”