U.S. pork supplies tightened before coronavirus shut slaughterhouses

CHICAGO (Reuters) - U.S. supplies of frozen pork fell in March before the coronavirus pandemic forced meat processors to close slaughterhouses, the U.S. Agriculture Department said on Wednesday, setting the stage for inventories to tighten further.

FILE PHOTO: One-month old pigs feed in a pen at Duncan Farms in Polo, Illinois, U.S. April 9, 2018. Picture taken April 9, 2018. REUTERS/Daniel Acker

Processors have closed major pork and beef plants following the spread of the new virus among employees, reducing U.S. meat output and causing livestock to back up on farms.

The latest shutdown announcement came earlier on Wednesday, when top meat supplier Tyson Foods Inc said it would close a plant that accounts for about 5% of U.S. pork production. Smithfield Foods, the world’s biggest pork processor, has warned the United States is moving “perilously close to the edge” in supplies for grocers.

Cold-storage facilities held 621.9 million pounds of pork as of March 31, down 27 million pounds from February, according to USDA data.

That exceeded the typical decline of about 11 million pounds for the month over the last five years, said Rich Nelson, chief strategist for broker Allendale. He predicted inventories could drop another 20 million to 40 million pounds in April, when inventories would normally rise about 27 million pounds.

“The plant problems started showing up in the first week in April,” Nelson said.

The USDA said total beef stocks in cold-storage facilities were 502.4 million pounds as of March 31, up about 8 million pounds from February. Stocks have typically declined about 18 million pounds in March, but slaughtering was bigger than expected this year, Nelson said. He is expecting a decline of about 40 million to 60 million pounds in April.

The coronavirus pandemic has changed demand for certain cuts of beef, pork and chicken as restaurant dining rooms have closed and consumers are cooking more meals at home.

Supplies of frozen pork bellies, which are mostly used for bacon in restaurants and other food-service outlets, rose to 78.8 million pounds as of March 31 from 74.3 million in February. Inventories of boneless pork loins, which are more often sold in grocery stores than restaurants, dropped to 27.1 million pounds from 30.6 million in February.

“We’re in the midst of this big dramatic shift in the way people eat protein,” said Altin Kalo, agricultural economist for Steiner Consulting. “It’s having different effects on the supply that is in the freezer.”

Reporting by Tom Polansek; Editing by Leslie Adler