USDA reports cold storage supplies of meat (and other agricultural commodities) each month. In December 2022 there were 544 million pounds of beef in cold storage facilities. That was the largest amount of beef in storage since December 2016. It also was the second largest amount of beef in storage on record, at least going back to 1973. What does this mean, if anything?
Cold storage stocks of meat are much different than grains or cotton. Meat is not storable for very long, compared to grains. It should be thought of as a flow stock, or product in the system, or cold chain, that is in movement eventually to its final destination. The meat is often frozen which causes a price discount compared to fresh. We often think about a buildup of stocks as an indicator of a demand problem. But, it can often reflect more production moving through the system, or that we have more imports and exports reflecting growing trade or even meat company strategies to stock up on items due to favorable prices for example in pork bellies.
Cold storage stocks of beef tend to peak in December-January and reach a low in June-July. The seasonal decline in stocks has been, on average, about 82 million pounds over the last 5 years. In 2022, there was very little seasonal decline and supplies grew to 544 million pounds by the end of the year.
Why are stocks so large? One factor is that beef production was a record large 28.3 billion pounds in 2022. U.S. total beef trade, exports plus imports, was also a record large 6.78 billion pounds in 2022. Beef exports were a record large 3.43 billion pounds and imports, 3.35 billion pounds, the most since 2015. That’s a lot of beef moving in, out, and around the country. The beef in storage is reported as boneless (mostly for ground beef) and cuts (think of steaks and other cuts). Of the 544 million pounds in storage, 498 million pounds are boneless beef, and that was 6.5 percent more than in December 2021. This beef is likely related to the large number of cows that were culled in 2022. The remaining 45.7 million pounds are beef cuts. Another way to put this in context is that 544 million pounds is about 1.6 pounds per person, which is not a lot different than per capita stocks over the last several decades. Per capita cold storage stocks were over 2 pounds back in the early to mid-1970s when the U.S hit peak cattle numbers and beef demand began to decline.
While the amount of beef in cold storage is curious, it’s not likely a sign of weakening demand yet. The next USDA cold storage report will be released on Friday afternoon and should add more context to this curious statistic.
Anderson, David. “An Interesting Curiosity, for Now.” Southern Ag Today 3(8.2). February 21, 2023. Permalink
Photo by Dana Sredojevic: https://www.pexels.com/photo/a-butcher-holding-a-slab-of-steak-13279400/