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Meat in cold storage awaiting export up, near record levels

By RACHEL LANE

WASHINGTON, D.C. — It is too soon to tell what impact tariffs might have on meat exports from the United States.

The USDA released data last week based on June figures; these reports are published every month, after the experts at the agency have calculated the previous month’s information. One of the figures released is in regards to cold storage.

While the processing pipeline may differ slightly for different kinds of protein, the meat exported is frozen before it is shipped. This stage in the process is “cold storage” – and frozen meat in storage warehouses is high, in some cases, near record levels.

On its own, this number doesn’t mean much, said Dustin Baker, National Pork Producer Council economist – it is important, and he discusses it whenever he gives a presentation, but it doesn’t tell the whole story.

May storage data for pork was high – close to record-setting high. The June data show the amount of pork in cold storage has declined to slightly below average numbers for a five-year period, about 3 percent below for all pork products. Hams and loins are 9 and 7 percent below a five-year average, respectively, Baker said.

“That’s a pretty good sign,” he explained. “Knowing that we’re going to have a lot of product coming to the market in the fall, I view it as advantageous that we’re not building a lot of stock.”

About 18 months ago, pork belly in cold storage made headlines, he noted. Right now, the amount stored is higher than it was a year ago, but the number is about average, overall. The amount of product available – a figure that can be impacted by weather, disease or other factors – demand and price expectations can impact how much meat is in cold storage at any one time, Baker pointed out.

At this point, the data USDA released last week is a month out of date. Things can change from month to month, but Baker is satisfied with the current numbers released in the report. New retaliatory tariffs from Mexico began in July and no one knows yet how that might impact pork exports to that country, he said.

How do the cold storage warehouses decide when to order? Are they going to wait until prices drop on pork products and stock up, or will they stop placing orders, which would stop processors from buying from farmers? Baker doesn’t know these answers, and attempts to reach out to several warehouses went unanswered.

He explained the pork industry is competitive, and warehouses seldom share information.

As for the future of American pork? “We’re advocating for a quick resolution on these trade issues and retaliatory issues. Our members are the best at what they do. If they have a fair and free market, we can show that to the world,” Baker said.

The total amount of red meat and poultry in cold storage was higher in May than in June. On a month-to-month basis, every month in 2018 has had higher totals than the 10-year average. Every month in 2017 was above the 10-year average, too, but was lower than the amounts in 2018 so far.

The figure spiked in September last year, with more than 2.5 billion pounds of meat and poultry in cold storage. According to the USDA, chicken in cold storage is about 875 million pounds. In 2018, the monthly rates have been 50 million pounds higher than 2016, the next-highest year on record.

The 2018 turkey cold-storage figures have been higher than in previous years until June, when this year’s numbers matched the 2017 figures. The curve of the 2017 chart tops out at about 600 million pounds, in August.

Hillary Makens, director of media relations at the National Cattlemen’s Beef Assoc., said beef in cold storage is up slightly year over year, but it is still below average.

“Cold storage supplies are impacted by numerous things, and protein production has been up since 2015. In addition, stronger export numbers mean more in storage – partially due to forward purchases and partially because it takes time to freeze product to prepare to ship it,” she said.

Having slightly more beef in storage than the 10-year average, but less than the three-year average, could be a sign the warehouse owners expect more exports in the near future, she said.

8/2/2018