Effects of COVID-19 Expected to Hinder Meat Supply
Beef availability worries from all around Canada continue to come in in as the COVID-19 pandemic continues to persist. Due to the general public protective measures by the authorities, slaughter plants in Canada and the US are minimizing line speeds, shifts, and momentary closures in other cases. These decisions are due to Covid-19 issues, and analysts are stating that meat supplies are likely to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are likely to fall 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 web conference organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate creates a major 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 meat packer is one of the primary meat packers on the Prairies. Several workers at other major meat plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of struggles in operations due to employee shortage. The plant, as of last week was running barely on a single shift, and this has substantially diminished its daily slaughter operations.
On the other hand, several American meat packing plants that deal with Canadian livestock have also stated drops in their slaughter activities, and others have momentarily stopped working because of their staff contracting the virus. Tyson meat plant in Pasco, Washington, has temporarily shut down while the JBS plant in Greeley, Colorado, was set to open last week after its short term closure at the start of the month.
According to Grier, beef has become a lot of 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 eat out more often as compared to eating at home. The pandemic has changed this as most full service restaurants have underwent a forced closure as the fight to control the spread of the virus continues. The effects of the pandemic will be felt seriously in the third quarter of this year as people focus more on paying the christmas charges during the first quarter. Grier further forecasts that in the 2nd and 3rd quarters, food sales will be about 20% of what they are now, while fast food service restaurants like McDonald’s could maintain 40% of their sales.
Within the same webinar, an American agricultural economist, Rob Murphy, claimed that reduced packaging capacity had caused a disconnect between meat prices and live animal prices. He emphasized that panic buying simply because of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US may be facing a slip of as much as 9% due to reduced processing speeds and temporary 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 also reported that price levels for cash cattle are most likely to continue dropping because the cattle providers need to move the cattle, and there is not much leverage with the packer. The feed yard placements are also likely to fall in the upcoming months, thus decreasing inventory, and this implies a drop in beef supply.