UTRECHT‎, NETHERLANDS – During the summer months, volatility in supply and demand among many US beef processors showed signs of stabilizing following the coronavirus pandemic’s initial outbreak.

In Rabobank’s quarterly beef report for Q3, US weekly fed slaughter capacity recovered up to 98% of pre-COVID-19 levels. According to Rabobank, with production facilities running near full capacity, cutout prices have returned to normal level.

“Carcass weights are roughly 30 lbs above a year ago, elevating weekly beef production,” the report said. “RaboResearch expects US beef production to be up 1% to 1.5% for the year.”

The numbers from Rabobank also indicate that year-to-date production is still off 2% after major reductions in May. According to the report, fed cattle supplies continue to be heavy in Plains states, with fed cattle markets expected to start eating into the backlog of cattle during August and beyond.  

Rabobank’s Seven-Nation Cattle Price Index showed the recovery of cattle prices from May to July around the world. The chart showed that most major exporting countries increased. However, US cattle prices declined.

During the last few months, China’s import demand has continued to dominate the global beef markets. Demand from China continues to lift Brazilian beef exports during the third quarter, Rabobank said. Exports to China are up 158% in volume from last year. China now represents 41% of total export market.

“China’s beef consumption has shown some resilience amid the sluggish economy resulting from COVID-19,” the report said. “In comparison to pork and poultry, which saw big price drops in Q2, beef wholesale prices have stayed firmly above Q4 2019 prices.”

Rabobank stated that Brazil is seeing some regions experiencing second waves, while others are still in their first wave of COVID-19. The number of new cases and fatalities in July remained stable, with reduction in some regions. The foodservice sector has resumed business in some states, but with reduced capacity. 

As for the European Union and the United Kingdom, beef production was down by 5% during January and May. Drops in production happened throughout Europe during the COVID-19 outbreak. Italy experienced the biggest decline at 16%, followed by Germany (-5%), Ireland (-5%), Spain (-4%) and France (-3%). Production took less of hit in the Netherlands (-2%), UK (-1%) and Poland (-1%).

Rabobank said improvement in demand during the summer months helped as foodservice locations began reopening. This helped stabilize carcass weights and pricing.

Canadian beef production showed dramatic recovery following a drastic reduction in production during April and May. Rabobank reported production down 6.7%, which is a significant improvement from previous months.

“There remains a fed cattle backlog in the system, although progress is being made to clear it,” the report said. “With net placements from March to May down 29% YOY, there will be ample opportunity to clear the back log in Q3.”