Beef supply worries from all over Canada continue steadily to trickle in as the Coronavirus pandemic continues to persist. Because of the general public protection measures by the authorities, butcher plants throughout Canada and the US are reducing line speeds, shifts, as well as short-term closures in various other cases. These types of decisions result from Covid-19 issues, and specialists are suggesting that meat supplies are expected to end up struck hard.
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 also informed those on a web conference organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate brings a unexpected challenge for cattle keepers.
The persistence of Covid-19 has caused a temporary closure of the Cargill plant at High River in Alta. The meat packer is one of the primary meat packers on the Prairies. Several workers at other primary meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of problems in operations due to staff shortage. The plant, as of last week was working barely on a single shift, and this has substantially diminished its daily slaughter operations.
Still, several American packaging plants that deal with Canadian animals have also announced decreases in their slaughter activities, while others have temporarily stopped operating because of the staff getting the virus as well. Tyson meat plant in Pasco, Washington, has temporarily closed whilst the JBS plant in Greeley, Colorado, was planning to open recently following its short term closure at the beginning of the month.
According to Grier, beef has come to be far more expensive at the counter in comparison 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 in comparison to eating at home. The pandemic has altered this as more full service diners have undergone a forced shutdown as the struggle to control the growth of the virus continues. The impacts of the pandemic will be felt drastically in the third quarter of this year as people concentrate more on paying the festive season bills during the first quarter. Grier further anticipates that in the 2nd and 3rd quarters, food sales will be close 20% of what they are today, while fast food restaurants like McDonald’s might keep 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, said that limited packaging capacity had caused a disconnect between meat prices and live animal prices. He pointed out that panic buying as a result of 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 a drop in processing speeds and short-term closure of meat 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 further stated that price levels for cash cattle are most likely to continue decreasing because the cattle suppliers need to move the cattle, and there is very little leverage with the packer. The feed yard placements are also expected to fall in the upcoming months, thus bringing down inventory, and this suggests a drop in beef supply.