The latest Cold Storage report from USDA’s National Agricultural Statistics Service, released this past week, shows depressed levels of red meat and poultry as well as a marked decrease in total fruit stocks. The monthly report shows the end-of-month volume of commodities in freezer storage throughout the United States. An important market-moving report, it covers most commodities that require cold transport – from nuts, fruits and vegetables to dairy and meat.
Cold-storage meat, poultry reduced
At the end of May total cold-storage stocks of meat and poultry, excluding duck, came in at slightly more than 2 billion pounds. That’s about 190 million pounds or 9 percent less than a year ago. All meat and poultry categories showed a year-over-year decline, with chicken declining the most. Total levels of red meat and poultry have been reduced since the height of the pandemic in 2020 when packing plants were severely disrupted by the pandemic. That led to a decline in production and consumer panic-buying. Total levels of animal protein followed the typical seasonal pattern through the rest of 2020 but began to diverge from the expected in February 2021. Normally stocks would begin to rebuild this time of year, but instead cold-storage levels have been declining for the past several months.
Total beef in cold storage was reported at 414 million pounds at the end of May. That’s about 3 million pounds less than May 2020, amounting to a 1 percent year-over-year decline. That’s mostly driven by an 8-million-pound decrease in boneless beef in storage, as bone-in beef increased by more than 4 million pounds. Beef in cold storage has largely remained immune to pandemic disruptions during the past year, maintaining its overall levels while following typical seasonal patterns.
But pork is a different story. At the beginning of the pandemic pork in cold storage decreased significantly and has not recovered. But since May 2020, pork has followed typical seasonal patterns without experiencing any more declines – but it’s also not rebuilding its levels. May is a month in which we need to take into account base effects when looking at year-over-year comparisons for pork. Compared to recent history, we are looking at much-reduced levels of pork in cold storage. But due to the decrease in May 2020 it’s only registering as a 1 percent year-over-year decline. Total pork in cold storage was reported at 461 million pounds, a decrease of about 7 million pounds from 2020.
The story in cold storage so far in 2021 is largely a chicken story. The overall declines in red meat and poultry were mostly driven by chicken, with 730 million pounds of the protein in cold storage, according to the most recent report. That equates to a decrease of almost 130 million pounds or 15 percent from 2020. While that was actually an increase as compared to this past month, there was a counter seasonal decline during the first five months of this year compared to recent years. It remains to be seen if chicken will experience its typical fall increase in cold-storage levels.
When looking at individual categories we see a mixed story. The largest driver of the decline in chicken levels compared to 2020 is in the “other” category, which decreased by 85 million pounds or 23 percent. Other notable declines were in breast meat, which decreased by almost 15 million pounds. Thigh meat decreased almost 20 million pounds or 60 percent. Drumsticks increased by 7 million pounds or 24 percent. Chicken paws increased by 55 percent or 12 million pounds. With an almost-20-percent decline from 2020, chicken wings have made headlines during the past several months. Wings have been experiencing a spectacular price run, which has been squeezing national chains that cater largely to Buffalo-style wings. In the second half of 2020, wholesale wing prices began a trend that really took off in 2021, resulting in spectacularly inflated chicken-wing prices. Those prices have backed off a bit in the past few weeks, but remain at almost 65 percent more than pre-pandemic levels. Those increased prices are likely more a function of stellar demand placing upward pressure on not only chicken-wing prices, but red meat and poultry prices in general.
Unfortunately we cannot just simply adjust the supply of chicken wings to match consumer appetites; we only have two wings per bird, and we don’t raise the birds just for their wings. That highlights the inherent complexity of livestock and meat markets, and producer inability to respond to demand with specific products.
Cold-storage vegetables stable
The total May cold-storage stocks of vegetables excluding potatoes came in at about 1.6 billion pounds. That represents a 1 percent increase from May 2020. All through the pandemic and into 2021, the total vegetable stock in cold storage has remained consistent with historical norms. The total stock of potatoes in cold storage decreased during summer 2020, at the same time the market faced a glut of fresh potatoes caused by demand-side disruptions during potato harvest. Many producers were forced to use the Coronavirus Food Assistance Program. Potato growers rely heavily on food-service and institutional demand, sectors that were devastated by COVID-19 lockdowns in 2020. The total stock of potatoes in cold storage is 3 percent more than in 2020 at more than 1.1 billion pounds, but still less than what’s typical for May. The stock of French fries in cold storage has remained more consistent during the pandemic and is at about the same level it was in 2019.
The year-over-year change in total fruit stocks in cold storage was a 23 percent decline, with the total stock in cold storage at about 720 million pounds in May. The largest contributor to the decline was the almost-65-million-pound decrease in frozen blueberries. The 39 percent reduction from a year ago is largely due to an increase in frozen blueberries in 2020, likely linked to reduced fresh-blueberry demand from COVID-19-affected industries. The current stock of frozen blueberries is 9 percent more than May 2019, suggesting a return to more-normal market conditions.
Total stock of strawberries in cold storage declined by more than 38 million pounds or 16 percent from May 2020. Strawberries also were more likely to be frozen this past year, with May 2020 total frozen strawberries exceeding May 2019 despite a continued trend of declining overall strawberry production. That drop is largely due to continued decreases in production and a return to more-typical cold-storage levels. Stone fruit, most especially tart cherries, are tracking in unexpected ways. The 2020 tart-cherry-season production levels decreased 47 percent from 2019 totals, largely due to late frosts. The USDA’s production forecast suggests similar totals for 2021, again due to frost. It’s likely frozen inventory will remain at less than historical levels into 2022 if the production forecast is accurate. The price for tart cherries increased by almost 152 percent, from 15 cents per pound to 38 cents per pound. April price data is consistent during the past year, suggesting those prices will hold at least until next harvest season.
The USDA’s latest Cold Storage report shows the animal-protein supply chain still struggling with the impacts of COVID-19. At the end of May total cold-storage stocks of meat and poultry, excluding duck, came in at slightly more than 2 billion pounds. That’s about 190 million pounds or 9 percent less than a year ago. The story in cold storage so far in 2021 is largely a chicken story, with the overall declines in red meat and poultry mostly being driven by a 130-million-pound reduction in chicken in cold storage. The impact of COVID-19 on produce in cold storage has been mixed. Vegetables in aggregate have been unaffected, while potatoes have become more volatile – especially when excluding French fries. The declines in fruit cold-storage stocks largely reflect more-normal marketing conditions, with the exception of frost affecting stone fruits.
Michael Nepveux is an economist with the American Farm Bureau Federation’s Market Intel. Visit www.fb.org/market-intel for more information.