Economic Tidbits

Cyberattack Hits Processing Sector

The cyberattack on the world’s largest meat processor and subsequent shutdown of processing facilities coming on the heels of the attack on the gasoline pipeline a few weeks ago generated considerable attention in agricultural, national, and local media. Nebraska, being the largest beef processing state in the nation, was a focal point of the attention as JBS has beef processing facilities in Grand Island and Omaha, both of which were affected by the shutdown. JBS also owns Swift prepared foods facilities in Council Bluffs. JBS controls about 20 percent of the nation’s hog and cattle processing capacity.

Table 1. U.S. Estimated Slaughter Numbers (# of head)

Source: USDA Agricultural Marketing Service

Table 1 shows the consequences of the attack on slaughter rates last week. Estimated cattle slaughter numbers equaled 94,000 head on Tuesday and 105,000 head on Wednesday. This compares to 121,000 and 120,000 head on the same days during the previous week. Tuesday’s slaughter was 22 percent below the prior week kill. On the hog side, Tuesday’s slaughter was 390,000 head compared to 485,000 the week prior, a decline of 20 percent, and Wednesday’s was 439,000 head compared to 483,000 the previous week, off 9 percent. Thursday’s numbers were on par with prior week levels.

Last week was already a short operating week due to Memorial Day which only heightened concerns with the loss of capacity. Coming into the holiday, packers were already struggling to keep up with demand and keep animal inventories current. The attack could have cause severe disruptions to supply chains, markets, and prices. Fortunately, due to the short-lived nature of the problem, major disruptions did not occur. Fed cattle prices were largely stable, although boxed beef prices were somewhat higher. Same for hogs—live hog prices appeared mostly stable while cutout prices were a bit higher.

The cyberattack again demonstrates the sensitivity of the meat processing and livestock sectors to “black swan” events. Resiliency in the supply chain was much discussed following the COVID-induced facility shutdowns last year. Last week’s events only heightened the concerns.

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