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CME: More Meat in Storage than Last Year

by 5m Editor
24 August 2011, at 7:22am

US - The USDA monthly survey of refrigerated warehouses report shows larger supplies of beef, pork and poultry in cold storage than a year ago and some of the press coverage appeared to have a bearish view of the report, write Steve Meyer and Len Steiner.

The authors have a somewhat different take, particularly with regard to beef and pork (at least, for some items). Even the broiler situation, while still difficult, is showing some improvement.

Below is a brief recap of the main product groups:

Total beef inventories at the end of July were pegged at 418.1 million pounds, 3.4 per cent lower than the previous month but still some 7.5 per cent higher than year ago levels.

Boneless beef stocks were 361.7 million pounds, 3.6 per cent lower than the previous month but 12.7 per cent higher than a year ago.

Boneless beef stocks have declined for the second consecutive month and are currently 4.9 per cent lower than the five year average.

The pace of boneless beef inventory draw-down has been quite rapid in the last two months, partly due to limited availability of imported beef.

Demand, particularly for ground beef, has been better than expected and some market participants likely misjudged the market going into Labor Day, as evidenced by the spike in the price of fat beef trim (high pork trim prices also had an effect).

In all, a positive report for beef stocks in the freezer.

Inventories of pork products at the end of July were reported at 453.9 million pounds, 16 per cent higher than a year ago but 1.8 per cent lower than the five year average. The authors view the pork number as moderately positive despite larger stocks than a year ago.

Pork inventories in July declined 8.3 per cent compared to the previous month, more than double the draw-down pace the month of July.

Ham stocks at the end of July were 134.7 million pounds, 9.5 per cent higher than a year ago and 8.3 per cent higher than the five year average.

Inventory build for the month was a bit slower than in previous years. Larger-than-normal stocks should buffer some of the expected higher prices into September and October.

Belly inventories seasonally decline into September and this year is no different. Belly stocks at the end of July were down 40 per cent from the previous month compared to a normal drawdown pace of about 30 per cent.

Current inventories are about 38 per cent higher than a year ago but remain some 27 per cent lower than the five year average.

Inventories of pork loins at the end of July were 21.6 million pounds, 24 per cent higher than a year ago.

The pace of pork loin draw-down in July was in line with previous years. Pork trim supplies in the freezer at the end of July were 37.0 million pounds, 24.6 per cent higher than a year ago but one per cent lower than the five year average.

As with other pork items, pork trim inventories declined 13 per cent compared to the previous month and were generally in line with the pace of draw-down for this time of year.

Trim inventories are not burdensome at this time and strong exports will likely continue to pressure prices in the short term.

Broiler inventories remain burdensome. Inventories of breast meat at the end of July were 145.4 million pounds, 47 per cent higher than a year ago and 29.2 per cent higher than the five year average.

Breast meat inventories in July dropped 7.1 per cent from the previous month, compared to an average 3.5 per cent draw-down pace for this time of year.

Inventories of leg quarters continue to be burdensome, up 9.7 per cent compared to the previous year and 53.5 per cent higher than the five-year average.

Total broiler meat stocks at 764.4 million pounds are 14.1 per cent higher than a year ago and 13.3 per cent higher than the five-year average.

Further Reading

- You can view the full report by clicking here.