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CME: Pork Inventories in Cold Storage at End of April Down 6%

23 May 2017

US - The latest USDA 'Cold Storage' report contained some positive implications for red meat demand in April, reports Steiner Consulting Group, DLR Division, Inc.

Output during the month increased significantly and yet supplies in cold storage at the end of the largely increased in line with the normal seasonal rather than showing a significant buildup. For poultry, the picture is a bit mixed, with some products indicating very robust demand and others still struggling with burdensome supplies.

Below are some of the highlights from the latest report:

Total supplies the main proteins in cold storage at the end of April (beef, pork, chicken and turkey) were 2.333 billion pounds, 1 per cent higher than a year ago and 4.4 per cent higher than a year ago. Overall inventories increased by 5.7 per cent vs. the previous month compared to a five year average build of 4.7 per cent. Beef, pork and chicken production increased sharply in April but this did not have a significant impact on cold storage stocks, implying robust demand has kept the flow of product moving. Boneless beef inventories at the end of April were 415.6 million pounds, 4 per cent less than a year ago and 3 per cent lower than the five year average. Normally inventories of boneless beef are steady in April (5-yr avg.) but very high prices for fat trim and limited imports from Australia/New Zealand caused inventories to decline for the month. Inventories of some beef cuts were counter seasonally higher but we think this is mostly due to freezer hedges than packers struggling to move product.

Pork inventories in cold storage at the end of April were 599.1 million pounds, 6 per cent less than a year ago and 8.8 per cent lower than the five year average. Pork inventories increased 9 per cent compared to the previous month in April. In the last five years the inventory build in April is about 5 per cent. The pork cutout declined significantly in April and it appears some of that pork ended up in the freezer. Still, the overall inventory position does not appear particularly burdensome and April stocks under 600 million pounds compare to 2013 when pork inventories exceeded 700 million pounds. Ham inventories at the end of April were 114.0 million pounds, 12.5 per cent less than last year and 2.9 per cent under the five year average. The ham inventory build in April was 26 per cent compared to a 5-yr average of 28 per cent. Pork belly stocks increased in April as the decline in wholesale markets likely encouraged packers/processors to put more product away. Belly stocks at 34.0 million pounds were 66 per cent higher than the previous month but still some 53 per cent under year ago levels. Inventories of picnics and trim continued to be relatively low, which should remain supportive of prices going into May and June when seasonally supplies decline while grilling demand improves. Picnic inventories at 8.5 million pounds were 26 per cent lower than last year and 42.5 per cent lower than the five year average while pork trim inventories at 40.8 million pounds were about the same as a year ago but 26 per cent less than the five year average.

The cold storage situation for poultry is a mixed bag. Breast meat supplies remain burdensome, up some 36.8 per cent compared to the five year average. Breast meat stocks increased 5 per cent from the previous month while in the last five years breast meat inventories on average declined 1 per cent in April. Leg quarter inventories increased 4 per cent compared to the previous month compared to a five year average build of 6 per cent. Demand for wings remains stellar. Wing inventories declined 4 per cent in April while in the last five years stocks on average increased 7 per cent for the month. Turkey breast supplies are heavy, which is reflected in the low price in product markets. Turkey breast stocks in cold storage were 106.7 million pounds, 52.3 per cent higher than last year and 66 per cent higher than the five year average. Whole turkey inventories at 221.3 million pounds were 21.5 per cent higher than last year and 7.4 per cent higher than the five year average.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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