Market Morsel: That sinking feeling
As previously outlined, some of the data inputs to the EP3 beef processor model can be delayed in their reporting so there are sometimes revisions made to previous margin updates. This has been the case for January 2021 with softer north asian beef export prices pushing the processor margin further into negative territory.
The earlier update outlined a $310 loss per head of cattle processed for January 2021. This has now been pushed even further into the red on the back of export price updates coming in 4% softer than previously reported. Higher co-product prices received assisted processors somewhat, but the 5% gain here wasn’t enough to completely offset the losses of the lower export prices, resulting in a revised January 2021 processor margin of $340 loss per head of cattle processed. This is the highest monthly loss on record for beef processor margin data going back to the early 2000s.
Preliminary data in for the February period shows a 2% lift in north American beef export prices, but this gain for processors has been completely offset by higher domestic cattle input prices to see the processor margin for February 2021 remain relatively static at a loss of $339.