More production days (23) certainly contributed to the increase in monthly output and when we adjust for production on a daily basis there have been a number of other months, particularly last year, when output actually exceeded this year.

One also needs to recognize the fact that from a pricing perspective, the rate of change rather than the absolute volume tends to be more important. Markets need time to adjust to shifts in supply and sudden large shifts in output will lead to more dramatic price moves.

In the last quarter of 2016 the combined DAILY output of red meat and poultry increased by an average of 5.3 per cent. By comparison, in Q2 of this year daily average output increased by around 2 per cent and so far in Q3 daily production is increasing by 3.2 per cent.

As meat protein supplies continue to expand, market participants are paying close attention to the supply of meat in cold storage. Large production increases accompanied by a big increase in cold storage stocks may indicate that the market may be having trouble absorbing all the increase and product is backing up.

But as with much in this life, there are caveats. Sure production may be increasing but if exports are increasing as well, the rise in cold storage stocks may simply reflect more supply being staged in warehouses before it gets shipped out of the country.

The export component, therefore, is an important consideration and should be viewed in tandem with the cold storage data. The latest USDA cold storage report paints a somewhat mixed picture for the protein industry.

At the end of August, there were 2.491 billion pounds of red meat and poultry in cold storage (see bottom of this page), 45.2 million pounds (+1.8 per cent) more than a year ago. Inventories normally increase into early fall before end users start to deplete them to support holiday needs.

Beef, pork and chicken exports continue to trend above year ago levels and thus we do not see the level of increase in cold storage as particularly problematic. The larger stocks and expectations of continued supply increases in the coming months should help temper meat protein price inflation, however.

Boneless beef inventories rose rapidly in August. At 437.8 million pounds the boneless beef inventory increased by 10 per cent compared to the previous month when normally inventories get depleted.

We do not know exactly what kind of beef products are included in this boneless beef total but suspect that the sharp decline in fat beef trimmings may have pushed some of this product in cold storage.

Beef imports also increased in June and July and some of this product also may have added to the overall inventory stocks. Finally, the beef export pace remains quite strong, with August beef shipments up sharply from the previous year (15-20 per cent) and on track to increase some 8- 10 per cent in September.

Total pork inventories in cold storage at the end of August were 575.7 million pounds, 5.5 per cent less than the previous year and 2.1 per cent less than the five year average. While pork inventories rose 3.8 per cent compared to the previous month, this increase was generally in line with what we normally see during this time of year.

In the last five years ham inventories have increased by an average of 19 per cent from July to August. This year the increase was just 4 per cent. End users normally build ham inventories between May and September in order to support holiday demand.

However, with pork production expected to hit all-time record levels this fall, some end users may have opted to slow down some of their inventory build. We continue to see very robust pork export demand and the smaller inventories should be supportive of the pork market later into the year.

Turkey and chicken breast inventories are burdensome as consumer demand shifts towards wings/dark meat.