Cattle prices collapsed this week, falling the exchange-maximum for two days straight, after a major meat processing plant was closed. A Tyson Foods Inc. facility in Kansas was damaged by fire last week and will be closed indefinitely. The plant is estimated to process over 6,000 animals per day, representing 5% of all American beef.
With the major operation offline, there could be a significant glut of cattle, creating a backlog across the entire industry. As a result, slaughter-ready cattle, represented by the August live cattle futures contract, fell more than 8 cents per pound, while the August feeder cattle contract (which represents juvenile cattle ready to be put into feedlots) fell over 10 cents per pound.
The contracts for feeder cattle and next year’s live cattle deliveries recovered significantly by week’s end, while cash market cattle remained depressed, a sign that markets expect the glut to be alleviated by late 2020.
While cattle prices are sharply lower, this is unlikely to translate to cheaper beef at the grocery. In fact, the reduced national beef processing capacity is likely to raise prices, leaving both ranchers and consumers hurt by the shutdowns.
Gold and silver shine
Gold and silver prices exploded to new highs this week as global economic woes sent stock markets tumbling. Concerns about interest rates and economic slowdown in China and Germany sent stocks sharply lower during the week, with the S&P 500 losing more than 3% in one day.
Ongoing political unrest in Hong Kong and rising fears of an economic crisis in Argentina compounded the global jitters, which sent many flocking toward precious metals.
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By the end of the week, gold and silver were worth $1,517 and $17.19 per ounce, respectively.
Crop report crushes corn
The much-anticipated U.S. Department of Agriculture report released Monday sent the corn market careening limit-down after the USDA projected a far larger corn crop than had been anticipated.
Most market watchers expected the USDA to reduce corn acreage and crop yields after this spring’s wet conditions created poor planting conditions. Instead, the government agency shocked everyone by raising their forecast for the size of the U.S. corn crop to 13.9 billion bushels.
This news sent corn to three-month low, trading Friday for $3.75 per bushel.
Meanwhile, the USDA projected a much smaller soybean crop due to lowered planted acreage figures, which helped November soybean prices weather the report with only moderate losses, trading for $8.78 per bushel on Friday.