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Packing Plants Quickly Returning To Year-Ago Capacity

Packing Plants Quickly Returning To Year-Ago Capacity
Beef processing is nearing year-ago capacity quicker than many experts predicted and Dr. Derrell Peel, OSU Extension livestock market economist explains why in today’s Beef Buzz with Radio Oklahoma Ag Network Farm Director Ron Hays.
 
We’ve made remarkable progress, faster than many thought, Peel said, and packers have plenty of incentive to get back to capacity as quickly as possible.
 
Estimated weekly slaughter is about 89 percent of one year ago and Peel said the carcass weights are 40 to 50 pounds heavier than normal, causing some difficulties with catching up on the backlog.
 
The heavier carcass weights this year are equal to adding about 30,000 head to the weekly slaughter as compared to a year ago, Peel said.
 
That’s helping ease the beef shortages in the near term but eventually the heavy weight cattle need to move through the system.
 
Peel predicts on the consumer side most of the meat supply should return to normal in the next couple of weeks, but it could take months for the feedlots to get through the backlog.
 
On the demand side, wholesale boxed beef prices have dropped $100 and Peel expects the price to come down more but volatility in the market coupled with uncertain economic times makes it difficult to predict how low the boxed beef prices will go.
 
At some point the reality of unemployment kicks in and that could play a role in reducing beef demand, Peel said.
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