US - Cattle futures have seen some strength so far this week, write Steve Meyer and Len Steiner.
Both Live and Feeder Cattle contracts were limit up Friday, then feeder cattle were expanded limit up Monday and live cattle were limit up again as well. Tuesday saw a bit of a cool down but still showed a positive movement for both contracts, gaining strength throughout the day.
This is curious in the face of cutout values that decreased both Monday and Tuesday, and given the holiday week there has been extremely scarce live animal trade so far this week. However, coming off of an estimated kill level last week of 590,000, steer dressed weights that were down 10 pounds week-over-week, and a bullish Cattle on Feed report this past Friday, the market will continue to take the good news.
On a separate note, USDA-NASS released their monthly Cold Storage report and their monthly Chicken and Eggs report yesterday.
On the cold storage side, it seems out of chicken, beef, pork, and lamb, the only protein making any headway in reducing their built up levels of frozen stocks is pork.
As of the end of November, all proteins are above their year ago stock levels.
Total beef in cold storage jumped 27 per cent year-over-year, pork was up 14 per cent, lamb and mutton up by 63 per cent, chicken up 27 per cent and even turkey crept up 1 per cent.
The reason that it seems only pork is making any headway, is it was the only product to see decreased cold storage levels from October 31st to November 30th. All other proteins experienced month-over-month increases, and although these increases were not completely counter seasonal, the high product levels persist.
Taking a closer look at the cold storage levels, within the pork complex decreased levels of hams, butts, variety meats, other and unclassified pork, created the month-over-month drop in total frozen pork levels.
Bellies saw a surprising increase from October to November, up 230 per cent, but November was also when we saw belly prices come down from their high point of the year.
Boneless beef in cold storage increased by 1 per cent (up 4.7 million pounds) while cuts of beef decreased less than 1 per cent (down 114,000 pounds). Compared to the rates of increase seen August through September for beef in cold storage, this slowed rate of increase is important to note.
On the chicken side, month-to-month cold storage levels of hens decreased. Frozen stocks of leg quarters and thigh quarters also finally started going down from their record high levels, both down 4 per cent from October 31st. Cold storage inventories of breast meat increased 5 per cent, legs up 21 per cent, and wings were up 7 per cent as of November 30th, compared to October.
Turkey was interesting, October inventories were actually 10 per cent below those in 2014, but after Thanksgiving frozen turkey levels were 1 per cent above November of 2014. Of course, previous month cold storage data is normally revised when the next month’s report is released.
Moving to the Chicken and Egg report, on the broiler side the main message was the industry continues to pull back growth plans due to poor margins.
The big number in the report was a 5 per cent decrease in the broiler hatchery supply flock year-over-year for November.
Broiler type chicks hatched during November were about even with prior year levels, and eggs in incubators on December 1st were down 1 per cent year-over -year. This slow down in growth on the broiler side was a bit more than expected and if it continues, broiler production could actually see a year -over-year decrease in 2017.
TheCattleSite News Desk