USDA’s Cattle On Feed report , released Friday afternoon, showed lower-than-expected May placements which resulted in lower June 1 feedlot inventories. The key data appear in the table above. Recall that there was substantial disagreement regarding the placement number among analysts before the report and they over-shot the number a bit. Cattle feeders are responding to higher feed prices as placements in lots with capacities of 1000 head or over were 12% smaller than last May. June 1 inventories were 4.1% lower (see page 2). The average May placement weight was 721 lbs., 4.7% higher than in May 2007 and 11% above the 5-yr. average. Bottom line: Lower fed cattle supplies this fall and early winter.

USDA Cattle on Feed Report Summary --- June 2008
	Number (Thou. Hd)		2008 as Pct. of 2007
	2007	2008	Actual	Pre-Report Est.**	Difference
Cattle On Feed, June 1 May Placements May Marketings	11,272 2,159 2,085	10,814 1,899 2,140	95.9 88.0 102.6	97.2 90.4 101.7	-1.3 -2.4 0.9

E-Livestock Volume	6/20/08	6/19/08	6/13/08
LE (E-Live Cattle):	10,763	7,424	9,090
GF (E-Feeder Cattle):	426	418	378
HE (E-Lean Hogs):	15,199	12,142	13,225

USDA’s monthly Cold Storage report, released Friday, indicated that total beef, pork and poultry inventories on May 31 were lower than at the end of April but still significantly larger than one year ago. May 31 meat and poultry stocks stood at 2.294 billion pounds, 2.6% lower than on April 30 but still 18% larger than last year. Frozen pork supplies, which you may recall were record large in both March and April, led the decline, falling 13% or 85 million pounds. That is the largest one-month reduction on record and bodes well for May pork export data (coming in July) since a good portion of the increased April freezer stocks is believed to be product that was poised for export but awaiting sufficient supplies of shipping containers. The largest drop in pork product stocks in both percentage and unit terms was in butts (-54% from last month) while bellies, ribs, other and unclassified all saw major reductions as well. Still, pork inventories are 15% larger than one year ago with hams, bellies and butts stocks more than 20% larger than last May 31. Frozen pork supplies usually peak in April and decline through the summer as slaughter rates fall. While still large, slaughter rates are indeed getting smaller. That fact combined with this year’s excellent exports lead us to think that frozen pork stocks will continue to decline but getting back to 2007 or 5-year average levels will take some remarkably large sales.

Chicken supplies, at 754.5 million pounds, were fractionally larger than at the end of April but were still 23.2% larger than last year. Recall that last year’s inventories were near record-low, so it is little surprise that the numbers are larger. These larger inventories will remain a challenge for poultry producers as they try to reduce current output to support prices. Turkey inventories were also up sharply (25%) from last year while frozen beef supplies were 4% larger than last year. Boneless beef (which normally accounts for 85-90% of all beef in freezers) stocks were 0.6% higher than last year.