Meat prices downright rotten
Market anxiety spilled into beef and pork prices this week, sending futures contracts sharply lower. Meat demand is reactive to overall economic concerns; when people have extra money, they’re more likely to buy steaks, but in hard times, they’re more likely to buy ground beef or switch to cheaper protein sources entirely.
Worse yet, as events, businesses, and schools close in an effort to contain the coronavirus spread, people will be less likely to eat out and will be preparing more meals at home, another factor that may reduce meat demand.
On the concerns of widespread shutdowns in the United States that increased rapidly on Thursday and Friday, cattle and hog futures fell the exchange-maximum “limit down” price both days. Selling was widespread, suggesting that supplies could outpace demand for future months.
As of midday Friday, April cattle futures were at 95.57 cents per pound, and April hogs were at 56.37 cents per pound, both “locked” at the limit down price of -4.5 cents on the day.
Oil spirals lower
Last week, the Organization of the Petroleum Exporting Countries agreed to reduce its oil output, if Russia would agree to the cuts as well. When Russia refused to cooperate, prices dropped sharply on concerns about a global supply glut.
To punish Russia, a nation heavily dependent on oil revenue, Saudi Arabia announced Monday that it would increase its production to a record high 13 million barrels per day, flooding the market with oil. Russia responded with threats of raising its production as well, sending oil to a four-year low of $27.34 per barrel last Monday.
As two of the world’s largest energy producers attempt to bankrupt one another, other oil producers worldwide will suffer, including Iran, Venezuela, and even U.S. drillers.
Historically, falling prices had been a boon for the U.S. on the whole, as low energy prices stimulated the economy. However, now that the U.S. has become a major oil producer, falling prices will reverberate across industries that are dependent on oil production, which helped contribute to last week’s stock market collapse.
As of midday Friday, April crude oil was worth $32 per barrel, half of where it stood at the beginning of the year.