Lean hog futures were modestly higher on Thursday despite lower wholesale prices. Market participants appeared cautious ahead of the report and did not want to be caught leaning the wrong way. The report will offer little comfort for bulls as pork supplies in cold storage were larger than expected and notably higher than a year ago. Particularly worrying was the sharp increase in the supply of pork trimmings.

While higher export numbers have been skewing the cold storage numbers for some time, the sharp rise in pork trim stocks coupled with a significant decline in trim values indicates that product is backing up in freezers. USDA reported hat the total supply of pork in cold storage was 624.7 million pounds, 8.8% higher than a year ago. While ham stocks have declined, largely because end users have limited their inventory builds going into Easter (another sign of soft demand), inventories of just about everything else is higher than last year.

Pork trim stocks were 64.9 million pounds, 22.1% higher than a year ago. The price of 72CL trim last night closed at 61 cents a pound, some 31 cents or 34% lower than the same time a year ago. The trim value is important as it affects most primal cutouts (you generate trim from just about everything). Pork belly stocks were 61.7 million pounds, 21.3% higher than a year ago. Pork belly prices last night closed at 105 cents per pound, about 35 cents or 25% lower than a year ago. In all, a report that seemed to confirm all the bearishness that we have seen in the wholesale market.

Beef cold storage stocks were pegged at 466.1 million pounds, 1.4% higher than a year ago but about 4% lower than January levels. Seasonally boneless beef stocks decline so the month to month change was not a surprise. Boneless beef inventories are about 4.2% higher than last year, in part reflecting higher imports.

Chicken stocks remain below last year’s levels as the industry has reduced slaughter and seems to have cleaned up much of the backlog that build up last summer. Breast meat stocks in cold storage were down 16.9% from last year and 6% lower than the five year average.

Turkey cold storage inventories are increasing at a faster pace than normal, currently up 21.1% compared to a year ago but down 4% vs. the 2007-11 average.

USDA has completed the Pork Mandatory Pork Reporting rule and the proposed rule will be published today in the Federal Register. After the rule is published, there will be a 60 days for a comment period after which the rule goes into effect. It will take time for the rule to be implemented, however, so do not expect to see the mandatory price data once the final rule is published. For the first six months USDA will publish both the voluntary price report and the mandatory price report concurrently. The rule is expected to provide for more transparent wholesale prices for pork cuts. As many of you know, pork pricing reporting has been very thin in recent years, making it particularly difficult to assess pork and hog values. You can read a copy of the proposed rule here.