Impact of new Coronavirus Expected to Affect Meat Supply

Beef accessibility concerns from all around Canada continue to trickle in as the COVID-19 pandemic persists. Due to the general public protection steps by the authorities, butcher houses in Canada and also the United States are minimizing line speeds, shifts, and momentary closures in some other cases. These decisions result from Covid-19 issues, and experts are stating 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 arranged by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slower production rate generates a unexpected challenge 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 meat packer is one of the main meat packers on the Prairies. Several employees at other main meat plants in JBS in Brooks in Alta have tested positive to Covid-19, causing a lot of problems in operations due to employee shortage. The plant, as of last week was working barely on a single shift, and this has dramatically lowered its daily slaughter operations.

Still, many American meat packing plants that deal with Canadian livestock have also stated reductions in their slaughter activities, and others have actually stopped operating due to staff members contracting the virus as well. Tyson meat plant in Pasco, Washington, has momentarily closed although the JBS plant in Greeley, Colorado, was set to open recently following its short term shutdown at the beginning of the month.

According to Grier, beef has become much more expensive at the counter 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 eat out more commonly in comparison to dining in the home. The pandemic has changed this as the majority of full service diners have underwent a forced closing as the fight 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 predicts that in the 2nd and 3rd quarters, food sales will be about 20% of what they are at this point, while fast food restaurants like McDonald’s could hold onto 40% of their sales.

During the same webinar, an American agricultural economist, Rob Murphy, claimed that restricted packaging capacity had brought about a disconnect between meat prices and live animal prices. He emphasized that panic buying due to Covid-19 contributed to strong margins among the packers.

Many slaughter plants in the US can be facing a slide of as much as 9% due to slower processing speeds and short-term closure of packing plants as a result of the COVID-19 pandemic. Murphy claims 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 dropping because the cattle sellers 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 lowering inventory, and this implies a drop in beef supply.

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