Impacts of new Coronavirus Most Likely to Upset Meat Packers
Beef access issues from all over Canada continue steadily to come in as the new Coronavirus pandemic remains. Because of the public safety steps by the authorities, butcher plants throughout Canada and the United States are lowering line speeds, shifts, and momentary closures in a few other cases. All of these measures are because of Covid-19 issues, and experts are saying that meat supplies are most likely to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are probably to slide by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He further advised those on an online presentation arranged 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 owners.
The persistence of Covid-19 has caused a short-term 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 major meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of struggles in operations due to staff shortage. The plant, as of last week was operating only on a single shift, and this has significantly lowered its daily slaughter operations.
On the other hand, more than a few American meat packing plants that deal with Canadian animals have also announced reductions in their slaughter activities, while others have briefly stopped working as a result of employees contracting the virus as well. Tyson meat plant in Pasco, Washington, has temporarily closed although the JBS plant in Greeley, Colorado, was set to open recently following its short term 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 “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 when compared with eating inside the home. The pandemic has altered this as a large percentage of full service restaurants have underwent a forced closure as the battle 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 festive season bills during the first quarter. Grier further forecasts that in the 2nd and 3rd quarters, food sales will be about 20% of what they are today, while fast food service restaurants like McDonald’s could possibly maintain 40% of their sales.
Within 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 due to Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US might 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 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 also claimed 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 most likely to fall in the coming months, thus decreasing inventory, and this signifies a drop in beef supply.