Beef supply issues from all across Canada continue steadily to come in as the new Coronavirus pandemic continues to persist. Because of the public protection measures by the authorities, butcher houses located in Canada and the United States continue to be reducing line speeds, shifts, as well as momentary closures in a few other situations. These types of steps are due to Covid-19 concerns, and analysts are saying that meat supplies are likely to end up struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are expected 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 brings a big problem for cattle keepers.
The persistence of Covid-19 has caused a short term closure of the Cargill plant at High River in Alta. The meat packer is one of the leading meat packers on the Prairies. Several employees at other primary meat plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of challenges in operations due to personnel shortage. The plant, as of last week was running barely on a single shift, and this has drastically lowered its daily slaughter operations.
Though, multiple American packaging plants that deal with Canadian animals have also announced drops in their slaughter activities, and others have briefly stopped operating as a result of the staff members getting the virus. Tyson meat plant in Pasco, Washington, has briefly shut down although the JBS plant in Greeley, Colorado, was planning to open recently after its temporary closure at the beginning of the month.
As reported by Grier, beef has come to be much more pricey at the counter in comparison 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 dine out more often as compared with dining at home. The pandemic has modified this as more full service diners have undergone a forced closure as the fight to control the growth of the virus continues. The effects of the pandemic will be felt drastically in the third quarter of this year as people concentrate more on paying the new years bills during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be around 20% of what they are at this point, while fast food service restaurants like McDonald’s could possibly hold onto 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, stated that reduced packaging capacity had resulted in a disconnect between meat prices and live animal prices. He stressed that panic buying due to 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 slower processing speeds and temporary closure of packing plants as a result of the Coronavirus pandemic. Murphy states 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 declining because the cattle sellers 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 coming months, thus reducing inventory, and this implies a drop in beef supply.