Impact of Coronavirus Very Likely to Upset Meat Supplies
Beef access concerns from all across Canada continue to come in as the COVID-19 pandemic persists. Because of the public protective steps by the authorities, slaughter plants in Canada as well as the US are minimizing line speeds, shifts, and also temporary closures in some other situations. All of these decisions result from Covid-19 concerns, and analysts are stating that meat supplies are most likely to end up struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are most likely to slide by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He also advised those on a web conference organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The sluggish production rate brings a big challenge for cattle owners.
The persistence of Covid-19 has brought about a temporary closure of the Cargill plant at High River in Alta. The packer is one of the major meat packers on the Prairies. Several employees at other primary meat plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of problems in operations due to personnel shortage. The plant, as of last week was running barely on a single shift, and this has drastically lowered its daily slaughter operations.
Still, more than a few US packaging plants that deal with Canadian animals have also stated decreases in their slaughter activities, and others have momentarily stopped working due to the workforce being infected with the virus as well. Tyson meat plant in Pasco, Washington, has temporarily closed although the JBS plant in Greeley, Colorado, was set to open recently following its temporary closure at the start of the month.
As reported by Grier, beef has come to be much more costly at the counter in comparison 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 love to eat out more often as compared with eating in the home. The pandemic has changed this as more full service eateries have underwent a forced shutdown as the battle to control the spread of the virus continues. The effects of the pandemic will be felt severely in the third quarter of this year as people focus more on paying the christmas bills during the first quarter. Grier further anticipates 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 hold onto 40% of their sales.
Within the same webinar, an American agricultural economist, Rob Murphy, reported that restricted packaging capacity had caused a disconnect between meat prices and live animal prices. He emphasized that panic buying as a result of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US could be facing a drop of as much as 9% due to a drop in processing speeds and short-term closure of packing plants as a result of the COVID-19 pandemic. Murphy reported 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 not much leverage with the packer. The feed yard placements are also expected to fall in the coming months, thus bringing down inventory, and this signifies a drop in beef supply.