U.S. inventories of frozen pork dropped by more than ever last month as outbreaks of the new coronavirus among meatpacking workers slowed production and pushed up prices, the federal government and analysts said on Monday.
The decline shows that meat stocks remained tight after companies like Tyson Foods Inc and WH Group’s Smithfield Foods reopened slaughterhouses they had closed in April and May to contain the spread of the highly contagious disease.
Cold storage facilities held about 467 million pounds of pork as of May 31, down 24% from the previous month and 26% from a year earlier, according to U.S. Department of Agriculture data.
Supplies shrank by 144 million pounds from April 30, far exceeding the typical drop of 15 million pounds for that period, said Rich Nelson, chief strategist for commodity broker Allendale. The decline was the biggest for any month in history and shrank supplies to their lowest level since August 2011, he said.
Reduced meat production due to plant shutdowns and slowdowns contributed to a 40.4% 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.
Total beef supplies in cold storage on May 31 were 415.2 million pounds, down 13% from a month earlier and up 2% from a year earlier. Inventories sank by 64 million pounds from April 30, a period in which they typically fall by 19 million pounds, according to Allendale.
Analysts expect production to increase as meat processors slaughter pigs and cattle that backed up on farms and in feedlots while plants were closed.