Impacts of new Coronavirus Expected to Upset Meat Supply

Beef availability concerns from all over Canada continue steadily to come in as the new Coronavirus pandemic continues to persist. As a result of the public protective measures by the authorities, slaughter plants in Canada and the United States continue to be decreasing line speeds, shifts, as well as temporary closures in some other situations. All of these decisions are due to Covid-19 concerns, and experts are suggesting that meat supplies are most likely to end up hardest hit.

Kevin Grier, a market analyst, says that Canadian slaughter activities are likely 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 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 unexpected issue 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 major packers on the Prairies. Several workers at other leading meat 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 only on a single shift, and this has considerably diminished its daily slaughter operations.

Though, plenty of US meat packing plants that deal with Canadian livestock have also announced reductions in their slaughter activities, and others have temporarily stopped operating because of their workforce being infected with the virus. Tyson meat plant in Pasco, Washington, has momentarily closed although the JBS plant in Greeley, Colorado, was planning to open recently following its short term shutdown from the start of the month.

As reported by Grier, beef has come to be far more costly 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 love to dine out more frequently in comparison to eating in the home. The pandemic has changed this as many full service restaurants have underwent a forced shutdown as the fight to control the growth of the virus continues. The impacts of the pandemic will be felt severely in the third quarter of this year as people focus more on paying the new years charges 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 now, while fast food restaurants like McDonald’s could hold onto 40% of their current sales.

Within the same webinar, an American agricultural economist, Rob Murphy, said that reduced packaging capacity had brought about a disconnect between meat prices and live animal prices. He emphasized that panic buying simply because of Covid-19 contributed to strong margins among the packers.

Many slaughter plants in the US may be facing a slip of as much as 9% due to reduced processing speeds and temporary closure of meat 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 further reported that price levels for cash cattle are most likely to continue declining because the cattle suppliers need to move the cattle, and there is not much leverage with the packer. The feed yard placements are also expected to fall in the coming months, thus lowering inventory, and this implies a drop in beef supply.

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