Impacts of COVID-19 Most Likely to Hinder Meat Availability
Beef access issues 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 lowering line speeds, shifts, and momentary closures in other cases. These actions are due to Covid-19 worries, and analysts are saying that meat supplies are likely to be struck hard.
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 further told those on a webinar organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate brings a unexpected problem for cattle keepers.
The persistence of Covid-19 has brought about a short-term closure of the Cargill plant at High River in Alta. The packer is one of the leading packers on the Prairies. Several employees at other primary meat plants in JBS in Brooks in Alta have tested positive to Covid-19, causing a lot of problems 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 livestock have also stated drops in their slaughter activities, and others have temporarily stopped running because of staff getting the virus. Tyson meat plant in Pasco, Washington, has briefly closed while the JBS plant in Greeley, Colorado, was expected to open last week after its temporary closure at the start of the month.
According to Grier, beef has come to be far more expensive 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 like to eat out more often as compared to eating at home. The pandemic has altered this as the majority of full service eateries have underwent a forced closing as the fight to control the spread of the virus continues. The effects of the pandemic continue to be felt badly in the third quarter of this year as people focus more on paying the christmas expenses 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 right now, while fast food service restaurants like McDonald’s might hold onto 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, stated that restricted 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 could be facing a slip of as much as 9% due to slower processing speeds and short-term closure of meat 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 claimed that price levels for cash cattle are most likely to continue dropping because the cattle suppliers need to move the cattle, and there is not much leverage with the packer. The feed yard placements are also expected to fall in the coming months, thus decreasing inventory, and this signifies a drop in beef supply.