More than 2.5 billion pounds of meat and poultry produced by US farmers have been stockpiled in cold-storage warehouses with the amount expected to grow further, according to the latest federal data.
Record production of beef, pork, poultry and turkey has become increasingly dependent on exports as US consumers cannot buy up the huge amount of meat. That would drive down prices for American consumers, restaurants and retailers. However, the recent import tariffs imposed by the country’s trade partners on the wide range of US goods, including agricultural produce, have slowed down sales of US meat and poultry abroad.
Earlier this year, China and Mexico, the largest foreign buyers of US meat, taxed American pork products in response to the tariffs imposed by the White House on steel, aluminum and some other goods. The measure made prices for US hams, chops and livers in those markets shoot upwards, reports Wall Street Journal.
“We’ve got too much capacity built in this industry if we’re not going to be exporting more product,” Ken Maschhoff, the chairman of Illinois-based hog-farming company Maschhoffs, told the media.
The businessman stresses that the company was considering expansion into less “geopolitically charged” regions, such as Eastern Europe or South America. The US Department of Agriculture expects the US meat industry to produce a record 102.7 billion pounds of meat in 2018. Plunging exports along with increasing domestic stockpiles puts at risk profits for the US meat processors as well as prices for livestock and poultry producers. Lean hog futures at the Chicago Mercantile Exchange have reportedly dropped 14 percent since the end of May.
Trade risks and increasing meat supplies may lead to “one of the biggest corrections we’ve seen in the industry in several years,” said Christine McCracken, protein analyst at Rabobank, as quoted by the media.