1.1 million tonnes of meat is stored in the US warehouses
Overproduction and a fall in exports could seriously damage the US meat industry. According to the US Department of Agriculture, the industry is expected to produce over 46 million tonnes of meat the year and that could turn into a real blow for the producers as the exports are falling due to the trade wars with China, Canada and Mexico, reports Wall Street Journal.
Pork exports to China are already down by 18% due to a 62% duty imposed by Beijing and Mexico has also added a 20% tariff for pork products originated in the US.
Federal data expected to be released this week will show a meat inventory of more than 1.1 million tonnes. That could put pressure on prices and severely reduce the profits for producers. In fact, it could produce "one of the biggest corrections we’ve seen in the industry in several years", as Rabobank's protein analyst Christine McCracken said.
The effects are already present in the market as some of the hog farmers and pork processors have put on hold a series of investments, such as Maschhoffs LLC's $30 million plan for to expand its breeding operations and upgrade truck washes and other biosecurity measures.
Ken Maschhoff, the company’s chairman, admitted that is considering moving a part of its operations to Eastern Europe or South America. If the exports are not rising in the next few months, most of the meat stored in the warehouses is going to turn into pet-food.
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