CME: Pork Exports Slumping; Beef, Poultry Exports on Softer Footing27 May 2013
US - The latest cold storage report did little to alleviate market’s concerns about the outlook for meat prices going into the summer months, writes Bruce Cochrane.
Cattle futures pulled back yesterday even before the cold storage release. The latest USDA survey indicated that as of 30 April 2013, there were 2.336 billion pounds of beef, pork and poultry in US cold storage inventory, 5.4 per cent higher than a year ago and 8.2 per cent larger than the five year average. In recent years, the expansion in US meat protein exports, especially in pork exports, has affected the size of the inventory positions since more meat needs to be staged before it is shipped to overseas destinations.
However, with pork exports slumping and beef and poultry exports on a softer footing, the big inventory numbers likely imply that a larger portion of this supply will have to be absorbed in the domestic market. It is also important to look at the details in the report as the situation for specific items (eg wings or bellies) is vastly different. Below are some of the highlights:
Beef: Total beef inventory at the end of April was pegged at 510.0 million pounds, 1.5 per cent lower than a year ago but 18.2 per cent higher than the five year average. Lean boneless beef prices in the US have been struggling to get much seasonal traction and the inventory number shows that total boneless beef stocks at 459.8 million pounds were 3.2 per cent higher than a year ago and 25.2 per cent higher than the five year average. Unfortunately the survey does not give much detail as to what kind of boneless beef is in storage but anecdotal evidence and the price performance indicates that lean beef supplies are heavier than a year ago. Stocks of fat beef trimmings reportedly are back to more normal levels and lower than last year when the LFTB saga caused product to be backed up in freezers across the country. Stocks of beef cuts moved counter seasonally lower, in part because high beef prices forced end users to deplete inventories. Total inventory of beef cuts at 50.2 million pounds was 30.5 per cent lower than a year ago and 21.8 per cent lower than the five year average.
Pork: Total pork inventories as of 30 April 2013 were 698.8 million pounds, 5.9 per cent higher than a year ago and 17.7 per cent higher than the five year average. The pace of inventory build into April was similar to that of a year ago but without the rate of export growth we saw last year. Total ham inventories at 125.5 million pounds were 12.5 per cent higher than last year and 34.6 per cent higher than the five year average. It is not unusual for ham inventories to increase from March to April, especially when Easter is in late March. Pork belly inventories remain tight and this has helped support belly prices so far. At the end of April, total belly stocks were 56.4 million pounds, 24.8 per cent lower than a year ago and 21.2 per cent lower than the five year average.
Poultry: Chicken inventories jumped 8.2 per cent from the previous month and they are now 11.3 per cent higher than a year ago and 1.9 per cent higher than the five year average. While breast meat supplies remain modestly below year ago levels and 5.1 per cent lower than the five year average, inventories of chicken wings have ballooned and are currently running 131 per cent above year ago levels. Sharply higher wing values last fall and earlier this year likely forced end users to pull them off the menus or raise prices and it appears product is now backing up in freezers. Leg quarter stocks also are heavy at 119.2 million pounds, 34.9 per cent higher than a year ago and 29 per cent higher than the five year average.
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