You might have noticed that there's a chicken shortage after the moratorium on half-price wing night at your favorite restaurant. Now, there might be a beef shortage—but this one's more akin to the infamous gas shortage stemming from the Colonial Pipeline cyber attack.
JBS suffered a ransomware attack that led the company to halt its facility operations. Is a beef shortage underway?
What to know about the JBS beef supplier cyber attack
JBS is an international meat supplier mainly operating in South America, North America, and Australia. The U.S. accounts for about 50 percent of all of JBS's revenue. Much like the Colonial Pipeline attack, JBS says that the ransomware attack on its U.S. operations stems from Russia.
The attack came during Memorial Day weekend and led to the shutdown of every JBS plant in the U.S. Globally, the company saw 20 percent of its production capabilities close temporarily. The U.S. Department of Agriculture responded to the shutdown by requesting amped up capacity from other facilities to help alleviate the strain on the supply chain as a whole.
JBS is slowly restarting facilities following the attack, but it isn't clear whether the company has negotiated with the attackers or if it was able to protect its systems without the need for ransom.
How JBS stock is responding to the news
JBS stock (OTC:JBSAY) fell 1.89 percent overnight. Since the market opened on June 2, the shares have risen another 0.84 percent within a half-hour period. Volatility is likely as JBS figures out how to get its facilities back on track to get over this cyber attack hiccup.
Investors might want to look out for how much JBS ends up paying the hackers if anything. The tune of the lost money could say a lot about upcoming stock price changes for JBS.
Will this cyber attack spearhead a beef shortage?
Another day, another shortage. So far, restaurants, grocery stores, and other meat providers in the U.S. haven't faced a supply shortage for beef. However, the JBS shutdown is still fresh news. The severity of the issue will largely depend on how quickly JBS is able to reopen facilities for operation.
A beef shortage could result in higher prices for the product. This is substantial considering that beef prices were already rising prior to the shutdown. In fact, the cost of beef was up 3.3 percent in April YoY due to the COVID-19 pandemic, increased export demand, and inflation impacting the industry.
Beef supply cyber attack is a warning to industrial businesses
Ransomware attackers are coming after supply chains, which makes this a fickle era for independently operating facilities without a safety net. This could change the way industries operate on a larger scale and ultimately make monopolization more difficult from a cybersecurity standpoint.