Impact of COVID-19 Expected to Affect Meat Producers

Beef supply concerns from all over Canada continue to trickle in as the new Coronavirus pandemic persists. Due to the public safety measures by the authorities, slaughter plants in Canada and the US are reducing line speeds, shifts, and short-term closures in other cases. These steps are due to Covid-19 concerns, and analysts are suggesting that meat supplies are probably to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are expected 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 an online presentation 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 led to a temporary closure of the Cargill plant at High River in Alta. The packer is one of the main packers on the Prairies. Several workers at other leading 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 barely on a single shift, and this has considerably reduced its daily slaughter operations.
On the other hand, plenty of American packaging plants that deal with Canadian livestock have also stated decreases in their slaughter activities, and others have briefly stopped running because of the staff getting the virus. Tyson meat plant in Pasco, Washington, has temporarily closed while the JBS plant in Greeley, Colorado, was expected to open last week after its short term closure at the start of the month.
According to Grier, beef has come to be a lot of more expensive 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 commonly as compared to eating at home. The pandemic has modified this as many full service restaurants have underwent a forced shutdown as the struggle to control the spread of the virus continues. The effects of the pandemic will be felt seriously in the third quarter of this year as people focus more on paying the new years expenses during the first quarter. Grier further forecasts that in the 2nd and 3rd quarters, food sales will be around 20% of what they are today, while fast food restaurants like McDonald’s could hold onto 40% of their current sales.
In the same webinar, an American agricultural economist, Rob Murphy, stated that limited packaging capacity had brought on a disconnect between meat prices and live animal prices. He pointed out that panic buying as a result of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US could be facing a drop of as much as 9% due to a drop in processing speeds and temporary closure of packing plants as a result of the 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 reported that price levels for cash cattle are most likely to continue decreasing because the cattle suppliers need to move the cattle, and there is nothing in the way of leverage with the packer. The feed yard placements are also probably going to fall in the upcoming months, thus bringing down inventory, and this suggests a drop in beef supply.

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