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Impacts of Coronavirus Likely to Upset Meat Producers

Beef accessibility concerns from all across Canada continue to trickle in as the new Coronavirus pandemic continues to persist. As a result of the public protective steps by the government, slaughter houses throughout Canada and the United States continue to be decreasing line speeds, shifts, and temporary closures in some other situations. All of these steps result from Covid-19 worries, and specialists are saying that meat supplies are expected to be hardest hit.

Kevin Grier, a market analyst, says that Canadian slaughter activities are expected to slide 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 webinar organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The sluggish production rate brings a major challenge for cattle owners.

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 major meat packers on the Prairies. Several employees at other major meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, leading to a lot of challenges in operations due to personnel shortage. The plant, as of last week was operating barely on a single shift, and this has significantly diminished its daily slaughter operations.

Though, multiple American packaging plants that deal with Canadian livestock have also announced reductions in their slaughter activities, while others have actually stopped operating due to the staff contracting the virus. Tyson meat plant in Pasco, Washington, has momentarily shut down whilst the JBS plant in Greeley, Colorado, was set to open last week after its temporary closure at the start of the month.

As reported by Grier, beef has come to be far more pricey at the counter when compared 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 prefer to dine out more frequently in comparison to dining in the home. The pandemic has modified this as a good number of full service eateries have underwent a forced shutdown as the struggle to control the spread 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 christmas 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 these days, while fast food service restaurants like McDonald’s could keep 40% of their sales.

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

Many slaughter plants in the US might be facing a slide of as much as 9% due to slower processing speeds and temporary closure of packing plants as a result of the new 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 also reported that price levels for cash cattle are most likely to continue declining because the cattle providers need to move the cattle, and there is not a great deal of leverage with the packer. The feed yard placements are also expected to fall in the upcoming months, thus reducing inventory, and this implies a drop in beef supply.

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