Beef access worries from all across Canada continue steadily to trickle in as the COVID-19 pandemic continues to persist. Due to the public protective steps by the authorities, butcher houses throughout Canada and the US continue to be minimizing line speeds, shifts, and short-term closures in a few other situations. These actions are due to Covid-19 worries, and specialists are suggesting that meat supplies are probably to be hardest hit.
Kevin Grier, a market analyst, says that Canadian slaughter activities are most likely to fall by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He also advised 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 led to a short term closure of the Cargill plant at High River in Alta. The packer is one of the primary packers on the Prairies. Several workers at other main 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 employee shortage. The plant, as of last week was working barely on a single shift, and this has significantly reduced its daily slaughter operations.
On the other hand, more than a few US packaging plants that deal with Canadian animals have also announced decreases in their slaughter activities, while others have momentarily stopped running due to the staff getting the virus as well. Tyson meat plant in Pasco, Washington, has briefly shut down while the JBS plant in Greeley, Colorado, was expected to open recently after its short term shutdown at the beginning of the month.
As reported by Grier, beef has become far more expensive at the counter when 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 prefer to eat out more often as compared with dining in the home. The pandemic has modified this as the vast majority of full service eateries have undergone a forced closure as the fight to control the spread of the virus continues. The impacts of the pandemic will be felt badly in the third quarter of this year as people concentrate more on paying the new years expenses during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be around 20% of what they are today, while fast food restaurants like McDonald’s could possibly hold onto 40% of their current sales.
In the same webinar, an American agricultural economist, Rob Murphy, reported that restricted packaging capacity had brought on a disconnect between meat prices and live animal prices. He stressed that panic buying as a result of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US can be facing a slip of as much as 9% due to slower processing speeds and short-term closure of packing plants as a result of the new Coronavirus 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 claimed that price levels for cash cattle are most likely to continue decreasing because the cattle sellers need to move the cattle, and there is very little leverage with the packer. The feed yard placements are also likely to fall in the upcoming months, thus bringing down inventory, and this signifies a drop in beef supply.