Dennis Smith of Archer Financial Services warned that the meat industry looks set to lose out, as flooding and power shortages continue and restaurants and grocery stores remain shut. In his livestock report, the live cattle futures market had reacted to the hurricane situation far more than lean hog futures, with a clear slowdown in beef orders apparent last week.
“The result is less selling pressure in live cattle futures than in lean hogs,” he wrote. “The slowdown in beef orders was clearly evident on Friday, with the choice beef cutout quoted down 2.55. Earlier in the week, choice beef had clawed its way to a nine-year high. That price level has proved to be very short lived.”
Speaking to GlobalMeatNews.com, Smith said that Sandy was “crippling business activity” all along the major population centre. “Power is out for approximately 10 million people,” he said. “Restoration of power will be slow, possibly taking several days.
“Normal business activity has come to a dead halt. Restaurant activity in the whole region is closed, which will typically impact beef more than pork, since more beef is consumed at US restaurants than pork.
“Re-stocking of shelves and freezers will eventually take place, but perhaps not until next week. In the meantime, the lost restaurant business will never be made up.”
He explained that the wholesale meat trade has slowed substantially, with packers slowing the slaughter pace “dramatically”.
“Cash hog prices are expected to be sharply lower for several days. The product, both beef and pork is expected to back up and trade lower. Many US Department of Agriculture offices are closed, so we’re not getting our normal flow of information either," he said.