Impacts of COVID-19 Likely to Upset Meat Supply
Beef availability concerns from all across Canada continue steadily to trickle in as the COVID-19 pandemic continues to persist. As a result of the general public protection measures by the authorities, slaughter houses throughout Canada and also the United States continue to be lowering line speeds, shifts, as well as temporary closures in a few other cases. These types of actions are caused by Covid-19 concerns, and analysts are saying that meat supplies are likely to end up struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are probably to decline by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He also told those on an online presentation arranged by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slower production rate creates a major issue for cattle owners.
The persistence of Covid-19 has resulted in a short term closure of the Cargill plant at High River in Alta. The packer is one of the leading meat packers on the Prairies. Several employees at other main meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, causing 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 considerably reduced its daily slaughter operations.
On the other hand, more than a few US packaging plants that deal with Canadian livestock have also stated reductions in their slaughter activities, and others have momentarily stopped running due to the workforce contracting the virus. Tyson meat plant in Pasco, Washington, has momentarily closed although the JBS plant in Greeley, Colorado, was poised to open recently after its short term shutdown from the start of the month.
As reported by Grier, beef has come to be far more expensive at the counter in comparison to pork and chicken. He says that “Beef costing has become uncompetitive relative to the other two main types of meat.”
According to Statistics Canada, Canadians prefer to dine out more commonly in comparison with dining at home. The pandemic has modified this as the majority of full service restaurants have undergone a forced closing as the battle 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 new years charges during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be around 20% of what they are at this point, while fast food restaurants like McDonald’s could maintain 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, claimed that restricted 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 might be facing a slip 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 Coronavirus 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 reported that price levels for cash cattle are most likely to continue declining because the cattle providers need to move the cattle, and there is not much leverage with the packer. The feed yard placements are also most likely to fall in the upcoming months, thus decreasing inventory, and this suggests a drop in beef supply.