CME: Reduction in Feedlot Placements Larger than Predicted

24 September 2012, at 7:31am

US - The latest USDA cold storage survey indicated that at the end of August total stocks of beef, pork and poultry were 2.221 billion pounds, 6.0% higher than a year ago and 3.1% higher than the five year average, write Steve Meyer and Len Steiner.

Meat supplies in cold storage increased by about 1% from the previous month, compared to last year when freezer stocks declined 3%.

Pork: The report will likely be viewed as bearish for pork prices in the near term. Almost the entire increase in meat cold storage supplies was due to more pork going into freezers.

The total pork inventory was reported to be 580.8 million pounds, 31.1% more than a year ago. Inventories of a number of items remain particularly heavy. Inventories of pork loins were 32.6 million pounds, 44% higher than a year ago. The sharp increase in hog slaughter and seasonally slower demand for pork loins at the end of August likely combined to push more product into freezers, which will tend to weigh on prices at least into the end of the year. Ham inventories were reported to be 195.0 million pounds, 30.2% higher than a year ago and 32.7% higher than the five year average.

Ham stocks normally increase by 6-10% from July. This year, they increased by 24% from the previous month and will likely be even higher at the end of September given two slaughter weeks that are in the top five largest ever.

Total beef in cold storage was 429.8 million pounds, 0.3% more than a year ago. Boneless beef stocks were 368.0 million pounds, 1.4% higher than a year ago while beef cut inventories were 61.7 million pounds, 6.2% lower than a year ago. Total broiler supplies in freezers were 655.3 million pounds, 5.6% lower than a year ago.