US frozen pork supplies stored in warehouses surged to a record high last month amid slumping export demand and global economic troubles, a government report has concluded.
The amounting of supplies could translate to cheaper pork prices for US consumers, analysts said.
Total frozen pork in US warehouses declined about 5% during July due to seasonal summer demand for bacon and grilling items, but stocks were 7% above last year’s record end-of-July tally, according to the USDA’s monthly cold storage report.
“The old record was set last year at 505 million, so it is a new record for the month,” said Ron Plain, livestock economist at the University of Missouri.
Pressure on US pork prices
The report is expected to weigh on Chicago Mercantile Exchange hog futures — which are hovering around seven-year lows — and will likely keep pressure on US pork prices going into the fall.
“The last report (for June) had a negative, sort of sobering effect on the market and this one will probably have the same impact,” said Dennis Smith, broker with Archer Financial. “It’s sort of staggering-type numbers here, as far as the pork that we’ve got piling up.”
Smith and other livestock analysts noted that exports have been slower than anticipated due to the weak economy in the United States and abroad and the H1N1 flu.
This caused US wholesale pork prices to fall this summer to their lowest level since January 2003.
“We had huge amounts of pork in cold storage in the spring of 2008 and that was because we were exporting huge amounts and it you’re exporting a lot you accumulate extra pork in cold storage. That’s not happening this year — its not good news” Plain said.