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CME: Cold Storage Supplies Higher than Last Year

23 April 2012

US - USDA released a number of supply related reports on Friday and we will try to do our best to recap some of the highlights, write Steve Meyer and Len Steiner.

Cold Storage: Beef, pork and poultry supplies in cold storage as of March 31 was reported at 2.073 billion pounds, 1.5% higher than a year ago and 1.1% higher than the five year average. Meat protein inventories were higher despite lower broiler supplies than a year ago. Beef inventories rose sharply in March, likely due to disruptions caused by negative LFTB stories and reported slowdown in ground beef demand. Boneless beef stocks (which includes lean and fat beef trim) were 438.2 million pounds 14% higher than a year ago. Beef inventories normally decline in March but this year they actually rose 6.1% from the previous month. The inventory of beef cuts rose 20% from the previous month and was 14% higher than a year ago.

Pork inventories showed big gains in February and they continued that trend in March. Total pork in cold storage was 612.6 million pounds, 6.7% higher than a year ago and 8.1% higher than the five year average. Pork belly stocks are currently hovering near the five year average but they are 25% higher than a year ago. Inventories of pork ribs, which generally tend to increase going into May are now 102 million pounds, 5.6% higher than a year ago and 12.1% higher than the five year average. Pork trim inventories have been rising since January and the burdensome stocks are reflected in pork trim prices, which are down 40% from a year ago. Total pork trim inventories were 70.6 million pounds, 33.9% higher than a year ago.

Broilers supplies appear to be in much better situation this year. Total broiler stocks at the end of March were 577.0 million pounds, 17.1% lower than a year ago. Breast meat in cold storage was reported at 123.8 million pounds, 13% lower than a year go. Wings remain very tight with March stocks at 32.741 million pounds, 52% lower than a year ago.

Takeaway: Cold storage inventory is bearish for beef and pork, still moderately bullish for chicken.

Cattle on feed: The total inventory of cattle on feed showed that as of April 1 there were 11.482 million head of cattle on feed, 2% more than a year ago and in line with pre-report estimates. Feedlot operators placed 1.792 million head on feed during March, 6.4% less than a year ago but 1.3 points higher than pre-report estimates. The higher than expected placements were offset by larger than expected marketings. The USDA survey pegged the total number of cattle feedlots sold in March at 1.918 million head, 3.6% lower than a year ago but 1.9% points higher than pre-report estimated.

The data on cattle marketings again does not fit with the monthly slaughter statistics which were also published on Friday. The monthly livestock survey pegged FI steer and heifer slaughter at 2.142 million head, 7.4% lower than March 2011. Cow slaughter in March was 522,000 head, 4.2% lower than a year ago.

Takeaway: Neutral report for cattle futures

Further Reading

- You can view the Cattle on Feed report by clicking here.


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