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CME: Reductions in Stocks of Frozen Meat and Poultry

24 October 2014

US - Stocks of frozen meat and poultry in US cold storage warehouses remained constant during September and finished the month 8.8 per cent lower than one year ago, writes Steve Meyer and Len Steiner.

Data for all meat and poultry items in the report appear in the table on page two (Follow the further reading link).

Some highlights are:

  • The total inventory of the four major species, at 2.017 billion pounds, remains very near its lowest level of the past five years. Interestingly, the levels that represent the bottom of the blue five year range area in the chart at right were set in 2010, two years after the first big run up in corn prices in the 2007-2008 crop year. That increase, of course, was fueled by the growth in ethanol output and the pressure it put on corn supplies.

    This year’s low inventories are two years after the drought induced surge of corn prices in the 2012-2013 crop year. The two low points for frozen inventories are indicative of the time lags that occur in these cost shocks. Their impacts on meat and poultry supplies and inventories comes well after the fact, masking the impact of the cost shock on consumer costs for meat and poultry.

  • The tightness of frozen meat and poultry stocks is being driven primarily by beef and chicken. As can be seen at right, both have been at their lowest levels of the past five years for several months now.

  • Beef inventories grew by 7.7 per cent in September but remained 16 per cent lower than one year ago. Lower boneless beef supplies were the major reason, of course, since they account for nearly 90 per cent of all beef in freezers but the stock of beef cuts fell by 3.9 million pounds or about 9 per cent as well in September.

  • Chicken inventories were down by 2.3 per cent in September but are now 9.3 per cent lower than last year. Leg quarters, wings and “other” chicken were the big contributors to both the monthly and year on year declines while the stock of breasts and breast meat were up 3.2 per cent from August 30 and 27.1 per cent from one year ago. “Leg product” stocks which include quarters, legs, thighs and thigh meat were five per cent lower than one month ago and just over 15 per cent lower than last year on 30 September. We expect those to grow in coming months due to the Russian embargo on US products.

  • While beef and chicken stocks are well below their five year lows, turkey is right at its low for that period. Turkey stocks usually peak in August or September and this year’s peak will be the lowest in our cold storage data set that dates to 1993. Part of that is the current cyclical reduction in turkey output but a more important part is the smaller and smaller dependence of the industry on holiday whole bird sales that are the main driver of seasonal storage increases.

  • 30 September pork inventories were unchanged from August and four per cent lower than one year ago. Bellies stocks remain 44 per cent larger than one year ago but remember that they were up 136 per cent, yr/yr, last month. The biggest contributor to the year on year reduction of pork stocks was hams, whose 30 September stocks of 194.08 million pounds were 12.4 per cent (27.556 million pounds!) lower than last year. The total was 8.1 per cent higher than on 31 August but the holidays are coming!

Further Reading

You can view the full report by clicking here.

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