Beef producers reeling during COVID epidemic

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Beef producers reeling during COVID epidemic

South Dakota ranchers are seeing current and future prices fall rapidly for cattle they are feeding now. With calving season here, that means even more input cost for ranchers. Photo by Brenda Jones

The COVID-19 pandemic has turned a bad situation for South Dakota beef producers into a crisis in which low market prices and corresponding revenue losses may force some ranchers into bankruptcy.

Beef producers are seeing what in January was an $80 profit on each animal sold fall to a $75 loss per head in March. For a farmer with 400 head, that could mean a shift from a profit of $32,000 to a loss of $30,000 on the cattle they sell once or twice a year. For a rancher with 1,000 head, that differential would result in a $155,000 shift down to a $75,000 loss.

The spread of the virus and a subsequent need for people to isolate and hunker down in order to be safe have led to a run on beef at grocery stores and a short-term spike in demand. But livestock industry officials say that will provide only a temporary buoy to the market.

With school closings eliminating the need for student lunches, and restaurants closing around the world, the long-term prognosis for the beef industry is not good as long as the pandemic continues. The November “futures” price for beef, or the price producers expect to get in the fall when selling cattle they are feeding now, has fallen by 20% since January and is now far below break-even.

 

 

 

 

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