Despite the heavy stocks, the pace of inventory drawdown in July was encouraging as stocks declined about 2.2% from the previous month. Much of the increase in stocks is due to more pork in storage but beef inventories also are increasing.

Pork in freezers rose sharply in the spring and it has remained well above year ago levels all summer. Total stocks were reported to be 546.6 million pounds, 20% more than a year ago. Inventories of a number of items remain particularly heavy. Inventories of pork loins were 28.6 million pounds, 32% higher than a year ago. Pork loin demand was quite good earlier in the spring but extreme drought and high temperatures appear to have slowed down sales and left more inventory in the freezer than a year ago. Similarly, inventories of pork ribs were pegged at 62.4 million pounds, 52% more than a year ago while inventories of trimmings at 45.2 million pounds were 24% higher than last year. Ham stocks were 154..6 million pounds, 15% higher than a year ago. Pork bellies are one of the few items showing a reduction in stocks compared to last year. Total belly stocks were 28.0 million pounds, 5% lower than a year ago. Higher pork freezer inventories and reports that producers have embarked in significant culling of the breeding herd have put downward pressure on hog and pork prices in the near term. With corn and soybean meal prices at record high levels, producers are wasting no time in pushing hogs to market. Pork production last week jumped 6.7% compared to year ago levels and reports are for big numbers again this week. Heavy freezer stocks clearly are not helpful in this situation. Hog futures dropped sharply on Wednesday, with the December contract closing at a contract low of 70.8 cents per pound.

Total beef in cold storage was 455.7 million pounds, 10% more than a year ago. Boneless beef stocks were up 6% while beef cut inventories were up 33%. End users remain very concerned about beef price inflation later in the year and many are using freezer hedges to protect prices at least for the next few months. Imports of boneless beef are above year ago levels but the pace of imports has slowed down, keeping stocks of boneless beef in check. Fat trim supplies are also more current.

Broiler meat supplies have declined sharply in recent months as the industry has curtailed production. Total broiler supplies in freezers were 648.6 million pounds, 14% lower than a year ago. Breast meat inventories were down 27%, wings were down 31% and leg quarters were down 16%. Tight inventories and expectations of further cutbacks remain bullish in the short to medium term for broiler prices. See page 2 for detailed table.