June 23, 2020

US frozen pork inventories decline as meat prices increase

The US government and analysts said meat plant closures caused by COVID-19 outbreaks among workers have resulted in a record drop US frozen pork inventories, while meat prices have surged, Reuters reported.

According to the US Department of Agriculture, as of May 31 there are 467 million pounds of pork in cold storage facilities. This is 24% drop compared to April and 26% from one year ago.

The lower supplies mean meat supplies are tight, even as major meat producers such as Tyson Foods and Smithfield Foods have gradually reopened slaughterhouses that were temporarily shut down in April and May to stop the spread of COVID-19.

Rich Nelson, Allendalechief strategist said pork supplies have dropped 144 million pounds from April 30, higher than the usual 15 million pounds drop for this period. This is the biggest recorded decline in history and has dropped supplies to its lowest since August 2011.

This has resulted in higher meat prices, up 40.4% in May and increasing the value of current supplies processors have in freezers.

Altin Kalo, Steiner Consultingagricultural economist said there have been less meat purchases by processors and exporters because of the price hike, which meant they took supplies from frozen inventories. He added that they will purchase more meat to replenish supplies.

Cold storage beef supplies were 415.2 million pounds as of May 31, a 13% decrease compared to the month prior and up 2% from one year ago. Allendale reported inventories fell 64 million pounds from April 30, when it normally drops by 19 million pounds.

Analysts estimate meat production to go up as meat processors go through livestock backlogged on farms and feedlots when meat plants were temporarily closed.

-      Reuters