Results of COVID-19 Expected to Upset Meat Availability
Beef access worries from all over Canada continue steadily to come in as the new Coronavirus pandemic continues to persist. As a result of the general public safety measures by the authorities, slaughter houses operating in Canada and also the United States are decreasing line speeds, shifts, and short-term closures in various other cases. These types of decisions result from Covid-19 worries, and specialists are stating that meat supplies are probably to end up hardest hit.
Kevin Grier, a market analyst, says that Canadian slaughter activities are expected to drop 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 webinar arranged by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slower production rate brings a major problem for cattle owners.
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 primary packers on the Prairies. Several employees at other major meat plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of challenges in operations due to staff shortage. The plant, as of last week was operating barely on a single shift, and this has substantially diminished its daily slaughter operations.
Having said that, several US packaging plants that deal with Canadian livestock have also stated reductions in their slaughter activities, and others have temporarily stopped operating because of workforce being infected with the virus. Tyson meat plant in Pasco, Washington, has temporarily shut down although the JBS plant in Greeley, Colorado, was set to open recently after its short term closure at the start of the month.
As reported by Grier, beef has become much more costly at the counter as 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 eat out more commonly as compared to eating in the home. The pandemic has modified this as the vast majority of full service eateries have undergone a forced shutdown as the fight to control the growth of the virus continues. The impacts of the pandemic continue to be felt severely in the third quarter of this year as people focus more on paying the festive season bills 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 service restaurants like McDonald’s might maintain 40% of their sales.
Within the same webinar, an American agricultural economist, Rob Murphy, said that limited packaging capacity had caused a disconnect between meat prices and live animal prices. He pointed out 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 slide of as much as 9% due to slower processing speeds and short-term closure of meat packing plants as a result of the new Coronavirus 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 also claimed that price levels for cash cattle are most likely to continue declining 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 likely to fall in the upcoming months, thus decreasing inventory, and this indicates a drop in beef supply.