CME: Turkey in Freezers Lesser Than a Year Ago

US - USDA’s November Cold Storage report, released Friday afternoon, will likely hit livestock markets as somewhat bullish on Monday, with that sentiment probably greatest for pork, write Steve Meyer and Len Steiner in their Daily Livestock Report for 20 November 2009.
calendar icon 23 November 2009
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Key data for all meat and poultry can be found on page 2 of the link below.

October is almost always the largest pork production month of the year due to higher fall slaughter and the fact that October contains no holidays. So, lower frozen pork inventories on 31 October versus 30 September, especially in a year that has seen as many difficulties as has 2009 is a positive sign — and 31 October frozen pork stocks of 520.13 million pounds were 1.6 per cent lower than one month earlier. The big drivers of the monthly decline were hams (down 13 per cent ) and “Other” (down 12.3 per cent). Stocks of trimmings, variety meats and bellies were slightly lower than at the end of September while inventories of loins, ribs, butts and picnics were significantly higher.

Hams stocks were also the big reason for lower pork inventories versus one year ago at –15.8 per cent. The one possible fly in the bullish ointment would be belly inventories at 37.006 million pounds, 70.6 per cent higher than last year. The amount of ribs in storage on 31 October (68.094 million pounds, 20.7 per cent more than last year and 26.1 per cent more than last month) is a symptom of the slow pace of recovery in the foodservice sector which accounts for a large portion of the sales of pork ribs in the US. Bellies are a likely casualty of a slow foodservice sector as well.

Chicken inventories continue to be far smaller than one year ago with total chicken stocks at 632.274 million pounds, down 19.8 per cent. The biggest drivers of the year-on-year decline were legs, leg quarters and thighs — generally export products. Stocks of breast meat which is almost exclusively sold within the US were sharply lower than last yea as well, signaling some positive impact of output reductions in the broiler sector. Even the “Other” category, which is comprised of many processed chicken items and accounts for over 50 per cent of total chicken in freezers in most months, was 8.9 per cent lower this year versus last year. Total chicken stocks were virtually unchanged from last month.

Beef stocks were nearly 10 per cent smaller than last year with beef cuts accounting for a larger percentage but boneless beef accounting for a MUCH larger unit reduction, No surprise there since boneless beef usually accounts for 80-plu percent of all beef in freezers. Beef stocks were also virtually unchanged from last month.

Finally, the amount of turkey in freezers on 1 November (510.896 million pounds) was 11.6 per cent lower than one year ago. The year-onyear comparisons are far more meaningful than month-to-month comparisons for turkey since turkey stocks are so severely seasonal. That is, turkey stocks ALWAYS drop sharply in October, the question is “How do stocks compare to last year?” The answer is “relatively tight” as the turkey sector has reduced production much more aggressively than any other meat/poultry sector. We warned last summer that, without sharp reductions in output or a huge increase in movements, turkey stocks could be very large this fall. It looks like a combination of the two has occurred to get stocks below year-earlier levels.

Friday also marked the release of USDA’s monthly Cattle on Feed report which indicated that, on 1 November, 11.134 million head of cattle were in US feedlots with inventories of 1000 head and more. That number is 1.5 per cent higher than last year, marking the second straight month of higher year-on-year on-feed numbers. As can be seen in the table at right, the increase was very close to the average of analysts’ pre-report estimates. October marketings numbered 1.755 million head, 3.2 per cent lower than one year ago but within 0.4 per cent of analysts’ estimates. Those two numbers will be neutral to Monday’s trade.

October placements, though, may well be bullish. 2.474 million head were placed in October, 1.5 per cent more than last year but analysts expected that number to be 2.6 per cent larger. Smaller placements in October imply lower fed cattle supplies in March and April.

The cattle placed in October weighed, on average, 687.4 lbs., a weight that is sharply lower than the 716-lb. average weights of both August and September but is still 10 lbs. heavier than the cattle placed in October 2008. The relatively high weight of the cattle going in to feedlots suggests continued high slaughter weights next spring, potentially offsetting some of the bullish sentiment of lower-than-expected placements.

Further Reading

- You can view the full report by clicking here.
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