Impacts of COVID-19 Very Likely to Upset Meat Producers

Beef accessibility concerns from all across Canada continue to trickle in as the Coronavirus pandemic persists. Due to the public safety measures by the authorities, slaughter plants in Canada and the US are decreasing line speeds, shifts, and temporary closures in other cases. These actions are due to Covid-19 issues, and analysts are suggesting that meat supplies are probably to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are probably 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 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 packers on the Prairies. Several workers at other main meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of problems in operations due to personnel shortage. The plant, as of last week was running barely on a single shift, and this has dramatically reduced its daily slaughter operations.
On the other hand, several American meat packing plants that deal with Canadian livestock have also stated drops in their slaughter activities, and others have temporarily stopped operating because of their staff 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 last week after its temporary closure at the beginning of the month.
According to Grier, beef has come to be a lot of more expensive at the counter as 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 love to eat out more often as compared to eating at home. The pandemic has changed this as most full service diners have undergone a forced closing as the battle to control the growth of the virus continues. The consequences of the pandemic continue to be felt drastically in the third quarter of this year as people concentrate more on paying the christmas expenses during the first quarter. Grier further forecasts that in the 2nd and 3rd quarters, food sales will be an estimated 20% of what they are right now, while fast food restaurants like McDonald’s may hold onto 40% of their current sales.
Within the same webinar, an American agricultural economist, Rob Murphy, reported that limited packaging capacity had resulted in a disconnect between meat prices and live animal prices. He pointed out that panic buying simply because of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US can be facing a drop of as much as 9% due to limited processing speeds and temporary closure of 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 also stated 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 a great deal of leverage with the packer. The feed yard placements are also likely to fall in the upcoming months, thus decreasing inventory, and this signifies a drop in beef supply.

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