Effects of new Coronavirus Possibly to Affect Meat Supplies
Beef supply concerns from all over Canada continue to come in in as the COVID-19 pandemic remains. Due to the public security measures by the authorities, slaughter plants in Canada and the US are reducing line speeds, shifts, and temporary closures in other cases. These actions are due to Covid-19 concerns, and analysts are stating that meat supplies are probably to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are most likely to decline 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 generates a big 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 workers at other leading meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, causing a lot of challenges in operations due to personnel shortage. The plant, as of last week was working only on a single shift, and this has considerably reduced its daily slaughter operations.
On the other hand, many American meat packing plants that deal with Canadian livestock have also stated reductions in their slaughter activities, and others have briefly stopped running because of their staff getting the virus as well. Tyson meat plant in Pasco, Washington, has briefly closed while the JBS plant in Greeley, Colorado, was set to open last week after its temporary closure at the start of the month.
According to Grier, beef has come to be 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 like to eat out more frequently as compared to eating at home. The pandemic has modified this as many full service eateries have undergone a forced closing as the fight to control the spread of the virus continues. The effects of the pandemic will be felt severely 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 near 20% of what they are now, while fast food service restaurants like McDonald’s could possibly hold onto 40% of their sales.
In the same webinar, an American agricultural economist, Rob Murphy, reported that restricted packaging capacity had resulted in 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 slip of as much as 9% due to limited processing speeds and temporary closure of packing plants as a result of the COVID-19 pandemic. Murphy reported 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 decreasing 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 expected to fall in the upcoming months, thus lowering inventory, and this suggests a drop in beef supply.