Impact of COVID-19 Possibly to Hinder Meat Packers

Beef availability concerns from all around Canada continue to come in as the COVID-19 pandemic persists. As a result of the public protection measures by the authorities, slaughter houses throughout Canada and also the US continue to be decreasing line speeds, shifts, and also temporary closures in a few other situations. These actions are because of Covid-19 worries, and specialists are suggesting that meat supplies are most likely to end up struck hard.

Kevin Grier, a market analyst, says that Canadian slaughter activities are likely 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 arranged by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slower production rate generates a big complication 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 primary packers on the Prairies. Several workers 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 staff shortage. The plant, as of last week was operating barely on a single shift, and this has dramatically diminished its daily slaughter operations.

On the other hand, plenty of US packaging plants that deal with Canadian livestock have also stated drops in their slaughter activities, while others have temporarily stopped operating as a result of the employees getting the virus. Tyson meat plant in Pasco, Washington, has momentarily closed whilst the JBS plant in Greeley, Colorado, was set to open recently after its temporary shutdown at the beginning of the month.

As reported by Grier, beef has come to be much more expensive at the counter in comparison 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 with eating in the home. The pandemic has altered this as the majority of full service eateries have underwent a forced closure as the struggle to control the growth of the virus continues. The impacts of the pandemic will be felt drastically in the third quarter of this year as people concentrate more on paying the festive season charges during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be close 20% of what they are now, while fast food service restaurants like McDonald’s may keep 40% of their current sales.

Within the same webinar, an American agricultural economist, Rob Murphy, stated that reduced packaging capacity had caused 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 may be facing a slide of as much as 9% due to limited processing speeds and short-term closure of packing plants as a result of the new 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 stated that price levels for cash cattle are most likely to continue decreasing because the cattle suppliers need to move the cattle, and there is very little leverage with the packer. The feed yard placements are also most likely to fall in the coming months, thus lowering inventory, and this indicates a drop in beef supply.

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