Impacts of new Coronavirus Most Likely to Upset Meat Supply
Beef availability worries from all over Canada continue to trickle in as the new Coronavirus pandemic persists. Due to the public protective measures by the authorities, butcher houses operating in Canada and also the United States are decreasing line speeds, shifts, and short-term closures in some other cases. All of these measures are because of Covid-19 worries, and experts are stating that meat supplies are expected 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 a web conference arranged by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The sluggish production rate creates a major issue for cattle keepers.
The persistence of Covid-19 has led to a short term closure of the Cargill plant at High River in Alta. The packer is one of the primary meat packers on the Prairies. Several workers at other leading meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of struggles in operations due to staff shortage. The plant, as of last week was working barely on a single shift, and this has considerably reduced its daily slaughter operations.
Having said that, multiple US meat packing plants that deal with Canadian livestock have also announced reductions in their slaughter activities, and others have briefly stopped working as a result of their staff members contracting the virus as well. Tyson meat plant in Pasco, Washington, has briefly closed while the JBS plant in Greeley, Colorado, was poised to open last week after its temporary closure at the beginning of the month.
According to Grier, beef has become far more pricey 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 prefer to dine out more commonly when compared with eating at home. The pandemic has changed this as the vast majority of full service restaurants have underwent a forced closure as the battle to control the spread of the virus continues. The effects of the pandemic will be felt drastically in the third quarter of this year as people focus more on paying the festive season expenses 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 today, while fast food restaurants like McDonald’s could keep 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, stated that reduced 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 may be facing a slip of as much as 9% due to slower processing speeds and temporary closure of meat packing plants as a result of the new Coronavirus pandemic. Murphy states 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 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 a great deal of leverage with the packer. The feed yard placements are also likely to fall in the upcoming months, thus reducing inventory, and this signifies a drop in beef supply.