Fall Looking Like a Mixed Bag for Beef - Peel Advises Producers Pay Close Attention to Market Dynamics
Oklahoma Farm Report
11 Sep 2019
The Tyson beef packing plant in Holcomb, Kansas that sustained fire damage on August 9th of this year remains shut down, though some processing has been allowed to continue in parts of the plant that were left unscathed. However, the actual kill floor is where the damage primarily occurred, specifically in regard to the electrical system in that space. With work underway to refurbish it, Tyson CEO Noel W. White has indicated that it will most likely be the end of the year or possibly January before the plant is officially reopened. Oklahoma University Extension Livestock Market Economist Dr. Derrell Peel, in an interview with Radio Oklahoma Ag Network Farm Director Ron Hays, says based on his analysis of the situation the market has overall handled the plant’s abrupt closure fairly well.
“In general, the response of this market has actually been pretty close to what I would have predicted,” he said. “If you look at the slaughter response that came in during the two week after that, it shows the industry did a remarkably good job with about a week’s time of compensating for the loss of that plant and minimizing the reduction of slaughter. Actually, the second week after the fire, the industry put together a slight increase.”
On the boxed beef side, Peel says the market quickly shot up, but in typical fashion has since corrected itself and come back down dramatically. According to Peel though, it is the fed cattle segment that is struggling the most to bounce back from the initial shock of this event as the industry is currently tapped out in its slaughter capacity. Over the next few weeks, though, he expects to see that tension ease as the market continues to work through the situation toward some possible stabilization and potentially even a slight pick up in fed prices as well. Meanwhile, the stocker/feeder segment continues to be skittish over this year’s corn crop and the prospect of higher feed costs that might stem from shorter corn supplies. At the same time, Peel says that while Labor Day ushers in seasonal lows, good wheat pasture demand could offset some of that pressure during September and possibly mute the lows anticipated in October.
“So, it’s a mixed bag and a very dynamic situation,” Peel remarked...
more, including audio [5:28 min.]