Results of Coronavirus Expected to Upset Meat Availability

Beef supply issues from all over Canada continue to trickle in as the Coronavirus pandemic continues to persist. Due to the public protective measures by the authorities, slaughter plants in Canada and the US are reducing line speeds, shifts, and momentary closures in other cases. These steps are due to Covid-19 concerns, and analysts are stating that meat supplies are probably to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are likely to drop 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 creates a major problem for cattle keepers.
The persistence of Covid-19 has brought about a short-term closure of the Cargill plant at High River in Alta. The meat packer is one of the leading meat packers on the Prairies. Several employees at other major meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, causing a lot of challenges in operations due to personnel shortage. The plant, as of last week was running barely on a single shift, and this has substantially diminished its daily slaughter operations.
On the other hand, several American packaging plants that deal with Canadian animals have also stated decreases in their slaughter activities, and others have momentarily stopped working because of their staff getting the virus as well. Tyson meat plant in Pasco, Washington, has briefly closed while the JBS plant in Greeley, Colorado, was planning to open last week after its temporary closure at the beginning of the month.
According to Grier, beef has come to be far more expensive at the counter as 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 frequently as compared to eating at home. The pandemic has altered this as more full service restaurants have undergone a forced closure as the struggle to control the growth of the virus continues. The effects of the pandemic will be felt drastically in the third quarter of this year as people concentrate more on paying the christmas 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 at this point, while fast food restaurants like McDonald’s could maintain 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, claimed that restricted packaging capacity had caused a disconnect between meat prices and live animal prices. He emphasized that panic buying due to Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US might be facing a slide of as much as 9% due to limited processing speeds and temporary closure of meat packing plants as a result of the Coronavirus 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 declining because the cattle suppliers need to move the cattle, and there is little leverage with the packer. The feed yard placements are also likely to fall in the coming months, thus lowering inventory, and this suggests a drop in beef supply.

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