Beef supply issues from all around Canada continue steadily to come in as the new Coronavirus pandemic continues to persist. Due to the public protective steps by the government, butcher plants located in Canada as well as the United States are lowering line speeds, shifts, and also short-term closures in other cases. These steps are because of Covid-19 concerns, and experts are stating that meat supplies are probably to end up struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are expected to fall 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 slow production rate generates a unexpected issue for cattle owners.
The persistence of Covid-19 has brought about a temporary closure of the Cargill plant at High River in Alta. The packer is one of the leading packers on the Prairies. Several employees at other leading meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, causing a lot of problems in operations due to staff shortage. The plant, as of last week was operating only on a single shift, and this has significantly diminished its daily slaughter operations.
Having said that, several US meat packing plants that deal with Canadian livestock have also stated reductions in their slaughter activities, while others have actually stopped operating because of the workforce contracting the virus. Tyson meat plant in Pasco, Washington, has temporarily closed although the JBS plant in Greeley, Colorado, was expected to open recently following its temporary shutdown at the start of the month.
According to Grier, beef has become much more pricey 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 like to dine out more frequently when compared with eating at home. The pandemic has changed this as the vast majority of full service restaurants have undergone a forced closing as the battle to control the spread of the virus continues. The consequences of the pandemic continue to be felt badly in the third quarter of this year as people focus more on paying the new years charges during the first quarter. Grier further anticipates that in the 2nd and 3rd quarters, food sales will be an estimated 20% of what they are at this point, while fast food service restaurants like McDonald’s may possibly maintain 40% of their 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 emphasized 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 decrease 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 reported 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 reported that price levels for cash cattle are most likely to continue dropping because the cattle providers 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 coming months, thus reducing inventory, and this indicates a drop in beef supply.