TheMeatSite.com - TheMeatSite.com - news, features and articles for the meat processing industry

News

CME: Cold Storage Supply of Pork, Poultry and Beef Down

24 September 2014

US - Total supply of beef, pork and chicken in cold storage at the end of the month was 1.999 billion pounds, 11.9 per cent lower than a year ago and 7.7 per cent lower than the five year average, write Steve Meyer and Len Steiner.

Tight meat protein supplies remain supportive of prices going into the holiday season. Beef stocks were pegged at 343.7 million pounds, down 20.1 per cent from a year ago and 18.1 per cent lower than the five year average.

Inventory of boneless beef, which includes both domestic and imported grinding beef, was pegged at 305.4 million pounds, 20.6 per cent lower than a year ago and 14.8 per cent lower than the five year average.

Inventories declined 7 per cent from the previous month when normally the draw down in stocks is only about 2 per cent. It is also interesting to note that despite a big surge in beef imports from Australia (+50 per cent YTD), overall freezer inventories are extremely tight.

End users faced with sharply higher beef prices have drawn down inventories and are opening to go hand to mouth. In a tight supply environment, this will further exacerbate the upward price pressure as end users have to bid up prices and have limited inventory to fall back on.

The inventory of beef cuts in cold storage was 38.2 million pounds, 16 per cent lower than a year ago and a tremendous 40 per cent below the five year average. Holidays are only three months away and the tight freezer stocks remain bullish for items that normally end users accumulate in late summer and early fall.

Pork inventories at the end of August were 546.3 million pounds, 0.5 per cent lower than a year ago but 9.4 per cent higher than the five year average. Inventories rose 2.4 per cent from the previous month, an increase that is a bit larger than normal for this time of year. However, this was largely driven by an increase in ham stocks. With ham prices firm, we expect some of this was due to export product designed to go to export that likely had to be diverted.

Despite the increase in ham inventories, stocks remain below year ago levels. Also, the pull back in prices in August likely had some packers/end users put more product in storage, anticipating that slaughter numbers would be tight in September and October.

Pork belly inventories at 45.6 million pounds declined some 30 per cent from the previous month while the normal draw down in stocks is 37 per cent. Pork belly inventories remain some 135 per cent higher than a year ago and 117.3 per cent higher than the five year average. Belly prices are weak and the cold storage numbers explain part of that weakness. With limited retail features, bellies have struggled this summer.

Broiler inventories were 616.0 million pounds at the end of August, 13.1 per cent lower than a year ago and 7.2 per cent lower than the five year average. Current stocks are supportive of the broiler market in the short term. Items like wings should continue to be well supported going into the fall.

End users have been reluctant to build inventories given expectations of increasing broiler supplies in the fall and winter. While lower grain prices should encourage expansion, for now broiler supplies remain well below expectations and lower inventories should continue to underpin prices going into the fall.

Further Reading

You can view the full report by clicking here.

TheMeatSite News Desk

Top image via Shutterstock



Our Sponsors

Partners


Seasonal Picks

Meat Cuts and Muscle Foods - 2nd Edition