Results of Coronavirus Expected to Affect Meat Packers
Beef availability worries from all around Canada continue to come in as the Coronavirus pandemic persists. Due to the public protective steps by the government, butcher plants located in Canada and the United States continue to be lowering line speeds, shifts, and also short-term closures in a few other cases. All of these decisions result from Covid-19 concerns, and experts are stating that meat supplies are likely to be hardest hit.
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 informed those on a web conference arranged by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate generates a unexpected challenge for cattle keepers.
The persistence of Covid-19 has caused a short-term closure of the Cargill plant at High River in Alta. The packer is one of the major meat 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 struggles in operations due to employee shortage. The plant, as of last week was operating only on a single shift, and this has drastically diminished its daily slaughter operations.
Still, more than a few American packaging plants that deal with Canadian animals have also announced drops in their slaughter activities, while others have actually stopped running as a result of workforce contracting the virus as well. Tyson meat plant in Pasco, Washington, has briefly shut down while the JBS plant in Greeley, Colorado, was expected to open last week following its temporary closure from the beginning of the month.
As reported by Grier, beef has come to be much 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 like to dine out more commonly compared to eating in the home. The pandemic has altered this as a large percentage of full service eateries have undergone a forced closing as the battle to control the growth of the virus continues. The consequences of the pandemic will be felt seriously in the third quarter of this year as people focus more on paying the christmas expenses during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be close 20% of what they are today, while fast food service restaurants like McDonald’s could keep 40% of their current sales.
Within the same webinar, an American agricultural economist, Rob Murphy, reported that reduced packaging capacity had resulted in a disconnect between meat prices and live animal prices. He stressed 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 slide of as much as 9% due to reduced 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 claimed that price levels for cash cattle are most likely to continue decreasing because the cattle sellers need to move the cattle, and there is little leverage with the packer. The feed yard placements are also probably going to fall in the coming months, thus lowering inventory, and this signifies a drop in beef supply.