Effects of COVID-19 Very Likely to Hinder Meat Supply
Beef availability concerns from all around Canada continue steadily to trickle in as the COVID-19 pandemic remains. As a result of the public protective steps by the government, butcher plants in Canada as well as the US continue to be reducing line speeds, shifts, and also short-term closures in various other cases. These kinds of actions are because of Covid-19 worries, and specialists are stating that meat supplies are likely 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 an online presentation organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The sluggish production rate creates a major problem for cattle keepers.
The persistence of Covid-19 has led to a temporary closure of the Cargill plant at High River in Alta. The meat packer is one of the primary meat packers on the Prairies. Several employees at other leading meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of problems in operations due to staff shortage. The plant, as of last week was operating barely on a single shift, and this has considerably lowered its daily slaughter operations.
However, many American meat packing plants that deal with Canadian livestock have also announced reductions in their slaughter activities, and others have briefly stopped operating as a result of the employees getting the virus. Tyson meat plant in Pasco, Washington, has briefly closed although the JBS plant in Greeley, Colorado, was expected to open recently after its short term shutdown at the start of the month.
As reported by Grier, beef has come to be far 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 dine out more commonly as compared with dining inside the home. The pandemic has modified this as more full service eateries have underwent a forced closing as the fight to control the spread of the virus continues. The consequences 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 forecasts that in the 2nd and 3rd quarters, food sales will be an estimated 20% of what they are right now, while fast food service restaurants like McDonald’s could possibly keep 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, reported that limited packaging capacity had brought on a disconnect between meat prices and live animal prices. He pointed out that panic buying due to Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US could be facing a slip of as much as 9% due to a drop in processing speeds and short-term closure of packing plants as a result of the new Coronavirus pandemic. Murphy claims 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 stated that price levels for cash cattle are most likely to continue declining because the cattle suppliers need to move the cattle, and there is little leverage with the packer. The feed yard placements are also most likely to fall in the coming months, thus decreasing inventory, and this indicates a drop in beef supply.