Impacts of COVID-19 Very Likely to Upset Meat Supplies

Beef availability worries from all across Canada continue steadily to come in as the COVID-19 pandemic persists. Due to the general public protective steps by the government, slaughter houses operating in Canada and also the United States are decreasing line speeds, shifts, as well as short-term closures in various other situations. These kinds of decisions are due to Covid-19 issues, and specialists are stating that meat supplies are most likely to be hardest hit.

Kevin Grier, a market analyst, says that Canadian slaughter activities are probably to fall by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He further advised those on a web conference organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slower production rate brings a unexpected complication for cattle keepers.

The persistence of Covid-19 has brought about a short term closure of the Cargill plant at High River in Alta. The meat packer is one of the main packers on the Prairies. Several workers at other main meat plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of problems in operations due to personnel shortage. The plant, as of last week was running only on a single shift, and this has substantially reduced its daily slaughter operations.

Having said that, many American meat packing plants that deal with Canadian animals have also stated decreases in their slaughter activities, and others have momentarily stopped running due to their staff being infected with the virus as well. Tyson meat plant in Pasco, Washington, has momentarily shut down although the JBS plant in Greeley, Colorado, was set to open recently after its short term closure from the start of the month.

As reported by Grier, beef has come to be much more expensive at the counter when compared to pork and chicken. He says “Beef costing has become uncompetitive relative to the other two main types of meat.”

According to Statistics Canada, Canadians prefer to dine out more frequently as compared with dining inside the home. The pandemic has modified this as the vast majority of full service diners have underwent a forced shutdown as the battle to control the growth of the virus continues. The consequences of the pandemic will be felt drastically in the third quarter of this year as people focus more on paying the festive season expenses during the first quarter. Grier further forecasts that in the 2nd and 3rd quarters, food sales will be near 20% of what they are today, while fast food restaurants like McDonald’s could maintain 40% of their current sales.

Within the same webinar, an American agricultural economist, Rob Murphy, stated that restricted packaging capacity had resulted in a disconnect between meat prices and live animal prices. He stressed that panic buying because of Covid-19 contributed to strong margins among the packers.

Many slaughter plants in the US can be facing a slide of as much as 9% due to a drop in processing speeds and short-term closure of meat packing plants as a result of the COVID-19 pandemic. Murphy stated that “We think that’s going to persist, that you’re going to continue to see those types of problems that will lead to year over year declines in steer and heifer slaughter, at least for the next couple of months and maybe beyond.”

Murphy further stated that price levels for cash cattle are most likely to continue decreasing because the cattle providers need to move the cattle, and there is little leverage with the packer. The feed yard placements are also likely to fall in the coming months, thus lowering inventory, and this suggests a drop in beef supply.

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