Results of Coronavirus Potentially to Hinder Meat Supply
Beef access worries from all around Canada continue to trickle in as the Coronavirus pandemic persists. Due to the public protective measures by the authorities, slaughter plants in Canada and the US are reducing line speeds, shifts, and momentary closures in other cases. These decisions are due to Covid-19 worries, and analysts are stating that meat supplies are expected to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are likely to slide by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He further told those on a webinar organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate creates a big problem for cattle keepers.
The persistence of Covid-19 has caused a short term closure of the Cargill plant at High River in Alta. The packer is one of the major meat packers on the Prairies. Several workers at other leading meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of struggles in operations due to personnel shortage. The plant, as of last week was operating only on a single shift, and this has drastically lowered its daily slaughter operations.
On the other hand, more than a few American meat packing plants that deal with Canadian animals have also stated reductions in their slaughter activities, and others have briefly stopped running because of their staff getting the virus. Tyson meat plant in Pasco, Washington, has momentarily shut down while the JBS plant in Greeley, Colorado, was planning to open last week after its temporary closure at the beginning of the month.
According to Grier, beef has become a lot of more expensive at the counter 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 like to eat out more commonly as compared to eating at home. The pandemic has modified this as a large number of full service eateries have underwent a forced closure as the struggle to control the growth of the virus continues. The consequences of the pandemic continue to be felt seriously in the third quarter of this year as people concentrate more on paying the festive season charges during the first quarter. Grier further anticipates that in the 2nd and 3rd quarters, food sales will be an estimated 20% of what they are these days, while fast food restaurants like McDonald’s could possibly hold onto 40% of their sales.
During the same webinar, an American agricultural economist, Rob Murphy, stated that reduced packaging capacity had brought about a disconnect between meat prices and live animal prices. He emphasized that panic buying due to Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US may be facing a drop of as much as 9% due to slower processing speeds and short-term closure of packing plants as a result of the Coronavirus pandemic. Murphy reports 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 dropping because the cattle suppliers need to move the cattle, and there is nothing in the way of leverage with the packer. The feed yard placements are also most likely to fall in the upcoming months, thus lowering inventory, and this signifies a drop in beef supply.