Impacts of COVID-19 Most Likely to Upset Meat Supplies
Beef accessibility concerns from all across Canada continue to come in in as the new Coronavirus pandemic remains. Because of the general public protective measures by the authorities, slaughter plants in Canada and the US are reducing line speeds, shifts, and momentary closures in other cases. These steps are due to Covid-19 concerns, and analysts are suggesting that meat supplies are probably to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are expected 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 unexpected problem for cattle keepers.
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 major packers on the Prairies. Several employees at other leading meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of challenges in operations due to personnel shortage. The plant, as of last week was operating barely on a single shift, and this has dramatically lowered its daily slaughter operations.
On the other hand, several American meat packing plants that deal with Canadian animals have also announced reductions in their slaughter activities, and others have temporarily stopped working because of the staff getting the virus. Tyson meat plant in Pasco, Washington, has temporarily shut down while the JBS plant in Greeley, Colorado, was poised to open last week after its temporary closure at the start of the month.
According to Grier, beef has come to be much more expensive at the counter 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 like to eat out more often as compared to eating at home. The pandemic has modified this as a large number of full service eateries have underwent a forced shutdown as the battle to control the spread of the virus continues. The impacts of the pandemic will be felt drastically in the third quarter of this year as people focus more on paying the festive season charges during the first quarter. Grier further predicts 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 may maintain 40% of their sales.
Within the same webinar, an American agricultural economist, Rob Murphy, stated that limited packaging capacity had caused a disconnect between meat prices and live animal prices. He stressed that panic buying due to 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 limited processing speeds and temporary closure of packing plants as a result of the new 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 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 coming months, thus bringing down inventory, and this suggests a drop in beef supply.