North American beef processors regaining capacity ahead of schedule

It has been a real struggle for meat packers to hold or build slaughter capacity during the COVID-19 outbreak. Not too long ago analysts thought slaughter levels would not increase to 80% of capacity until mid summer but in both Canada and the U.S., the weekly slaughter is climbing back faster than first thought.

The Cargill plant at High River, Alta. .which received the bulk of the mainstream attention for its numbers of cases and casualties, has been running at full capacity since May 6th and is running Saturday shifts as well, according to a Cargill spokesperson. JBS at Brooks, Alta., will move back to two full shifts this week.

U.S. plants have been experiencing the same level of increased capacity, and the weekly slaughter continues to rise. The expected weekly kill in the U.S. is around 530,000 head which is roughly 80% of normal weekly capacity although Saturday shifts are making up the difference.

 

Plants are attempting to deal with the backlog that has built during the last six weeks. In the U.S. it is estimated that one million cattle should have already been slaughtered. Late last month, the Canadian Cattlemen’s Association estimated that it was costing the industry $400,000 per day to feed cattle that should have already been slaughtered.

One of the indicators that the beef supply chain is finding some relief is the boxed beef price. From the end of January through March, the cutout value more than doubled as slaughter capacity was constrained. In the chart below, we see that recently the boxed beef price has declined in the last two weeks which coincides with increased slaughter numbers.

Packers in Canada and the U.S. have worked in cooperation with local health authorities and unions to make this increased capacity happen.

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