Beef access issues from all around Canada continue steadily to come in as the COVID-19 pandemic continues to persist. Due to the general public protective steps by the government, butcher houses throughout Canada and also the US continue to be minimizing line speeds, shifts, and also temporary closures in other situations. These decisions are because of Covid-19 issues, and specialists are stating that meat supplies are likely 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 also told those on an online presentation organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The sluggish production rate creates a unexpected problem for cattle owners.
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 leading packers on the Prairies. Several employees at other primary meat plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in 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 drastically lowered its daily slaughter operations.
However, plenty of American meat packing plants that deal with Canadian livestock have also announced decreases in their slaughter activities, and others have temporarily stopped running due to workforce being infected with the virus as well. Tyson meat plant in Pasco, Washington, has briefly shut down while the JBS plant in Greeley, Colorado, was poised to open recently following its temporary shutdown from the start of the month.
According to Grier, beef has come to be much more costly 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 like to dine out more often as compared with eating inside the home. The pandemic has altered this as the majority of full service restaurants have undergone a forced closing as the battle to control the growth of the virus continues. The impacts of the pandemic continue to be felt badly in the third quarter of this year as people focus more on paying the new years expenses during the first quarter. Grier further anticipates that in the 2nd and 3rd quarters, food sales will be about 20% of what they are these days, while fast food service restaurants like McDonald’s may possibly hold onto 40% of their sales.
Within the same webinar, an American agricultural economist, Rob Murphy, claimed that reduced packaging capacity had brought about a disconnect between meat prices and live animal prices. He stressed that panic buying due to Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US can be facing a slide of as much as 9% due to slower 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 further reported that price levels for cash cattle are most likely to continue decreasing because the cattle sellers need to move the cattle, and there is not much leverage with the packer. The feed yard placements are also most likely to fall in the coming months, thus lowering inventory, and this suggests a drop in beef supply.