Meat prices are diverging wildly. Wholesale beef prices continue to climb higher while wholesale prices for chicken plunged (although chicken prices have retraced a portion of their losses recently). Prices of choice beef chuck, the largest primal, increased 104% since mid-March to $3.35 a pound. Shortly after beef’s rally began, prices of boneless skinless breasts, the largest chicken cut, broke from their seasonal price strength to fall 23% to $1.08 a pound. This divergence is less a sign of COVID’s relative impact on the different supply chains, and more a revealing glimpse of the different industry structures for beef and chicken.
When slaughterhouses see a tumble in consumer demand, as with COVID-19, they can cut back on purchases of live cattle. Their profits may still be damaged, but they may avoid selling massive amounts of beef at a loss. Chicken integrators, on the other hand, can’t simply stop buying, as they already own the live birds. It takes chicken companies weeks to slow the production line, and in the meantime they must continue to sell into a low-demand consumer market.
The throttling back of cattle processing, and the mismatch between supply and the new demand levels, have created a significant overabundance of live cattle and a scarcity of beef. Meanwhile, the continued throughput of chicken has resulted in an overabundance of chicken meat.
With several packing plants idled, the task of reopening safely may be a tall order. Despite President Trump’s executive order, we are likely to see cheaper chicken and expensive beef for some time.
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