Consequence of new Coronavirus Most Likely to Upset Meat Availability
Beef availability concerns from all across Canada continue steadily to come in as the COVID-19 pandemic persists. As a result of the general public protective measures by the government, butcher houses throughout Canada and the US are lowering line speeds, shifts, and temporary closures in various other situations. All of these actions result from Covid-19 issues, and experts are saying that meat supplies are most likely to end up hardest hit.
Kevin Grier, a market analyst, says that Canadian slaughter activities are probably to drop 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 a web conference organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The sluggish production rate creates a major complication 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 major meat packers on the Prairies. Several workers at other major meat plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of struggles in operations due to employee shortage. The plant, as of last week was operating only on a single shift, and this has dramatically reduced its daily slaughter operations.
Having said that, many US meat packing plants that deal with Canadian livestock have also stated drops in their slaughter activities, and others have momentarily stopped running as a result of their employees contracting the virus as well. Tyson meat plant in Pasco, Washington, has momentarily closed while the JBS plant in Greeley, Colorado, was expected to open last week following 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 when compared 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 love to dine out more frequently compared to dining in the home. The pandemic has changed this as the majority of full service restaurants have undergone a forced closing as the fight to control the spread of the virus continues. The impacts of the pandemic will be felt severely 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 these days, while fast food restaurants like McDonald’s may possibly keep 40% of their sales.
During the same webinar, an American agricultural economist, Rob Murphy, claimed that limited packaging capacity had caused 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 might be facing a decrease of as much as 9% due to slower processing speeds and temporary closure of packing plants as a result of the COVID-19 pandemic. Murphy reports 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 dropping because the cattle providers need to move the cattle, and there is nothing in the way of leverage with the packer. The feed yard placements are also most likely to fall in the coming months, thus reducing inventory, and this suggests a drop in beef supply.