Livestock prices had been in a sharp decline for most of the year due to knock-on effects from the coronavirus outbreak. Initially, Chinese economic woes sapped demand for meat exports, and then U.S. turmoil added to concerns about consumers’ willingness to pay for expensive cuts of meat.
During March and April, falling demand from slaughterhouses facing quarantine shutdowns caused markets to collapse, taking prices for cattle and hogs near the lowest level in a decade.
However, prices started to rebound recently as the U.S. outbreak has slowed, and President Trump directed slaughterhouses to remain open under the Defense Production Act.
Additionally, Chinese demand for U.S. meat has been on the rise, drawing down U.S. supplies, especially of pork.
These factors combined to send livestock prices soaring from their multi-year lows. June live cattle have gained nearly 25% during the last two weeks, trading Friday for 98 cents per pound, while June lean hogs rose by a staggering 48% since mid-April to trade Friday for 63 cents per pound. Hoarding and panic buying of meat at grocery stores in many locales has become the latest upshot.
Despite the rally in futures markets, prices are still too low for many producers to make money. Worse yet, many have large inventories of animals that they are still unable to sell.
**Sunny Outlook for OJ
While many commodity prices are depressed alongside the general economic crisis caused by coronavirus, orange juice is trading near a one-year high.
Often sought by consumers looking for an immune-system boost, OJ is feeling an increase demand during the outbreak.
Adding to the rally are concerns about Florida’s orange crop this year. The Sunshine State produces 70% of U.S. citrus, and is second only to Brazil in growing juicing oranges.
Long term, market watchers warn that this rally could vaporize if virus concerns fall away. If this short-term demand surge isn’t the start of a new trend, U.S. consumers may resume their decades-long trend of drinking less OJ, sending prices back lower.
As of Friday midday, July frozen concentrated orange juice futures traded for $1.20 per pound.