Effects of COVID-19 Potentially to Upset Meat Producers

Beef supply issues from all across Canada continue to come in as the COVID-19 pandemic continues to persist. Due to the public protective measures by the authorities, slaughter houses throughout Canada and the US continue to be reducing line speeds, shifts, and also temporary closures in some other situations. All of these measures are caused by Covid-19 concerns, and experts are stating that meat supplies are likely to end up 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 web conference organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slower 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 meat packer is one of the major packers on the Prairies. Several workers at other leading meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of problems in operations due to personnel shortage. The plant, as of last week was working barely on a single shift, and this has significantly diminished its daily slaughter operations.

Though, more than a few US packaging plants that deal with Canadian animals have also announced reductions in their slaughter activities, and others have briefly stopped running because of employees being infected with the virus. Tyson meat plant in Pasco, Washington, has momentarily closed although the JBS plant in Greeley, Colorado, was poised to open recently after its temporary shutdown at the start of the month.

As reported by Grier, beef has come to be much more pricey 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 love to eat out more commonly in comparison with eating in the home. The pandemic has altered this as a large percentage of full service eateries have underwent a forced closing as the battle to control the spread of the virus continues. The consequences of the pandemic continue to be felt drastically in the third quarter of this year as people concentrate more on paying the new years bills during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be near 20% of what they are these days, while fast food service restaurants like McDonald’s could possibly maintain 40% of their current sales.

During the same webinar, an American agricultural economist, Rob Murphy, stated that limited packaging capacity had brought about a disconnect between meat prices and live animal prices. He pointed out that panic buying simply because of 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 reduced processing speeds and short-term closure of packing plants as a result of the Coronavirus 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 further claimed that price levels for cash cattle are most likely to continue dropping because the cattle sellers need to move the cattle, and there is little leverage with the packer. The feed yard placements are also probably going to fall in the upcoming months, thus lowering inventory, and this indicates a drop in beef supply.

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