Beef availability issues from all over Canada continue to come in as the new Coronavirus pandemic continues to persist. Due to the public protection steps by the authorities, butcher plants located in Canada and the United States continue to be decreasing line speeds, shifts, as well as temporary closures in some other cases. These types of actions are because of Covid-19 issues, and experts are suggesting that meat supplies are probably to end up struck hard.
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 organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate creates a big challenge for cattle keepers.
The persistence of Covid-19 has resulted in 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 primary meat plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of challenges in operations due to employee shortage. The plant, as of last week was working only on a single shift, and this has drastically lowered its daily slaughter operations.
On the other hand, many US meat packing plants that deal with Canadian livestock have also stated drops in their slaughter activities, and others have briefly stopped operating as a result of the workforce getting the virus. Tyson meat plant in Pasco, Washington, has momentarily closed although the JBS plant in Greeley, Colorado, was expected to open recently after its temporary shutdown from the start of the month.
As reported by Grier, beef has become much more expensive at the counter when 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 commonly when compared with dining at home. The pandemic has changed this as a large percentage of full service restaurants have underwent a forced closing as the battle to control the spread of the virus continues. The impacts of the pandemic will be felt severely in the third quarter of this year as people focus more on paying the christmas expenses 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 service restaurants like McDonald’s might keep 40% of their sales.
During 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 might be facing a slip 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 new Coronavirus pandemic. Murphy stated 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 stated that price levels for cash cattle are most likely to continue dropping because the cattle suppliers need to move the cattle, and there is not much leverage with the packer. The feed yard placements are also expected to fall in the upcoming months, thus bringing down inventory, and this suggests a drop in beef supply.