CME: Chicken Inventories Up from Previous Month, Year Ago

US - The latest USDA "Cold Storage" report showed that stocks of beef, pork and poultry at the end of August were about 1.2 per cent lower than the previous month but still about 0.8 per cent higher than a year ago, write Steve Meyer and Len Steiner.
calendar icon 25 September 2013
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The stock drawdown was for the most part in line with normal patterns for this time of year although the situation for specific groups and subgroups offered some interesting insights.

Below are the highlights by protein:

The pork inventory estimated at 540.0 million pounds was down 0.7 per cent from the previous month and down 7.8 per cent from a year ago. But comparisons to a year ago are a bit deceptive as near record high slaughter last year caused inventories to swell at the end of August 2012. Pork inventories still are about 10.2 per cent above the five year average. The inventory drawdown in August was 0.7 per cent, which is close to normal for this time of year. Ham inventories increased 11 per cent from July, which is also normal for this time of year. Still, ham stocks are now up 28.3 per cent above the five year average. Despite the big inventories, ham values have held up well so far. It is possible that ham inventories have increased recently due to expanding export sales. Still, the heavy stocks could weigh on near term pork and hog values, especially if hog slaughter approaches more normal levels. Pork belly stocks were 19.1 million pounds, 34.6 per cent higher than a year ago but still about 18.5 per cent lower than the five year average. Belly prices have been very firm for much of this year. Inventories will likely decline again in September but should start moving up again into year end. A smaller than expected slaughter could continue to push belly prices up, however, as in recent years demand appears to have far outpaced supply growth for this item. Pork loin stocks at 24.9 million pounds were 23 per cent lower than a year ago while pork trimmings at 36.7 million pounds were down 30.4 per cent.

Chicken inventories at 691.3 million pounds were up 1.1 per cent from the previous month and up 4.8 per cent from a year ago. The action in the broiler complex appears to be somewhat negative, with inventories building at a time when they normally are steady to lower. Inventories for wings and leg quarters are particularly heavy.

Beef inventories declined 6.2 per cent from the previous month, a much faster pace than normal at this time of year. High prices of fat beef trim likely encouraged a further drawdown in fat beef stocks. Seasonally lower fat trim values in the fall should encourage some inventory building but end users are coming in with tighter than usual supplies. This should remain supportive of the trim market going into the holidays. Lean beef inventories also remain somewhat lower than normal. Beef imports continue to be limited by the seasonal decline in New Zealand shipments and historically light imports of Australian beef. Inventories of beef cuts were up 2 per cent from the previous month, a slower pace than normal and down 30 per cent from a year ago. High beef costs in August likely limited some of the inventory build for the holidays. End users will come into the holiday season with smaller stocks and this is generally supportive of beef prices for Q4.

Further Reading

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