Supplies of all three main proteins were significantly higher than a year ago, reflecting the impact of higher production (pork, chicken), lower exports (pork, chicken, beef) and higher imports (beef).

The increase suggests that in some cases product is ending up in the freezer rather than absorbed in the consumer markets, leaving a larger supply available for consumption in Q2. Below are some of the highlights from the report.

Beef: Supplies of boneless beef in cold storage were 438.8 million pounds, 20.3 per cent higher than a year ago and 11.5 per cent higher than the five year average. We think a significant contributor to the increase in boneless beef stocks have been larger imports from Australia, New Zealand and other countries.

USDA does not indicate whether beef in storage is from domestic or imported sources so we cannot say for sure but data from US Customs shows imports from Australia are up 79 per cent from a year ago, Mexico is up 34 per cent while New Zealand is up 21 per cent.

Almost all this beef is boneless frozen product that as a first step goes into refrigerated warehouse prior to entering trade.

While higher supplies of boneless beef will help contain grinding beef inflation going into Memorial Day, we do not see this as a particularly significant drag for cattle prices in the long term.

New Zealand and Uruguayan supplies will be lower in the second half of the year while Australia is vulnerable to changes in weather conditions.

The US continues to have a net shortage of lean grinding beef at this time and the higher inventories are helping alleviate some of that shortage, rather than burdening the market.

Pork: Total pork supplies in cold storage at the end of March were 668.6 million pounds, 16.2 per cent higher than a year ago and 14.4 per cent higher than the five year average. The pace of supply depletion was in line with other years but overall cold storage stocks are burdensome at this time.

It appears that both packers and end users thought prices for some pork items, particularly picnics and pork trimmings, were too low and put product away in the freezer. Normally prices for these products improve into the spring with higher hot dog and sausage demand.

Pork trim inventories are up 86.8 per cent from a year ago and 30.5 per cent higher than the five year average.

Inventories of picnics are up 115.7 per cent from last year and 66.5 per cent higher than the five year average.

Hog slaughter numbers remain large, however, and the additional supply of pork in storage will tend to dampen the seasonal increase in the price of these items and remain a drag for the overall value of the cutout.

Ham inventories were up 16.9 per cent from the five year average but the rate of depletion going into Easter.

Chicken: It appears that lack of export demand and increasing domestic supplies is taking its toll, with more chicken going into freezers.

Total chicken supply in cold storage was 751.9 million pounds, 27.1 per cent higher than last year and 24.1 per cent higher than the five year average.

Inventories of leg quarters, a key export item, were 188.7 million pounds, 77.1 per cent higher than a year ago and 94.3 per cent higher than the 5-yr average.