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US frozen pork supplies in record fall as the coronavirus raises meat prices

The USDA and livestock analysts report that US inventories of frozen pork showed their biggest recorded drop last month.

23 June 2020, at 8:16am

Reuters reports that the drop came amid outbreaks of COVID-19 among meat plant workers. The infections slowed meat production lines and pushed up finished prices.

The decline shows that meat stocks were restricted after companies like Smithfield Foods and Tyson Foods Inc reopened slaughterhouses that had temporarily shuttered in April and May to contain the spread of coronavirus.

The USDA reported that cold storage facilities held around 467 million pounds of pork as of 31 May, down 24 percent from April and 26 percent from 2019.

According to Richard Nelson, chief strategist for commodity broker Allendale Inc, supplies shrank by 144 million pounds from 30 April. This outstrips the expected drop of 15 million pounds for that period. The decline was the largest for any month in history. Nelson told Reuters that the decline shrank supplies to their lowest level since August 2011.

Reduced meat production due to plant shutdowns and slowdowns contributed to a 40.4 percent surge in prices in May, increasing the value of supplies that processors had in freezers.

Processors and exporters slowed new purchases of meat last month because of the spike and drew down frozen inventories instead, said Altin Kalo, agricultural economist for Steiner Consulting. They will need to buy meat to replenish supplies, he said.

"Especially exporters that draw down those stocks are going to have to go back into the market and get some product bought," Kalo said.

Analysts expect production to increase and meat processors slaughter pigs and cattle that backed up on farms while plants were idle.

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