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CME: Cold Storage of Meat Protein Supplies Up in February

27 March 2019

US - The total inventory of beef, pork, chicken and turkey in cold storage at the end of February was estimated at 2.422 billion pounds, 1.1 percent higher than a year ago and now 8.2 percent higher than the five year average, reports Steiner Consulting Group, DLR Division, Inc.

The cold storage supply of these four proteins was 4.5 percent vs. the previous month. This compares to a 2.6 percent m/m gain we saw last year and 2.8 percent average increase in the last five years.

The supply of boneless beef in cold storage was 450.9 million pounds, 8.3 percent higher than a year ago and 4.3 percent higher than the five year average. Boneless beef stocks declined 5.6 percent from the previous month, in line with the five year average drawdown of 5.4 percent.

Users are comfortable with higher boneless beef stocks given the risk of higher prices into the spring. Most of the increase in boneless beef inventories has been in the Middle Atlantic region.

We do not think this is due to higher imports but rather end users building up their inventory positions ahead of spring. Low prices for 50CL beef and some other products were a strong inducement to increase freezer hedges for spring/summer needs.

The total inventory of pork products in cold storage at the end of February was 616.0 million pounds, 1 percent higher than a year ago but still 2.1 percent lower than the five year average. Pork inventories increased 9.5 percent from the previous month.

Last year, the Jan-Feb inventory increase was 5 percent and in the last five years the inventory build has averaged around 6.9 percent. Hog slaughter was quite high in February and it appears some product ended up in the freezer.

Due to confidentiality issues, USDA does not report where pork inventories are located. With all the speculation surrounding potential big China purchases, the current inventory numbers are not particularly concerning.

Ham inventories in February were 127.7 million pounds, 4.1 percent higher than a year ago and 4.9 percent higher than the five year average. The inventory build in February was about 13 percent compared to a 12 percent average for the past five years.

Easter is in late-April this year so the March drawdown may not be as big as last year. Pork bellies in cold storage were estimated at 53.8 million pounds, 9.8 percent higher than a year ago but 4.6 percent lower than the five year average. This was the most bullish number in the pork section.

In the last five years the Jan-Feb belly inventory has increased by about 9 percent. This year it was unchanged. We think the current rally in pork belly prices reflects, in part, the fact that users do not have enough product around them and are rushing to put up some additional inventory hedges.

Pork rib inventory at the end of February was 142.6 million pounds, 8.4 percent higher than a year ago and 10.7 percent higher than the five year average. Inventory build in February was 12 percent compared to 9 percent average increase in the last five years.

The supply of all chicken products in cold storage was 874.8 million pounds, 2.8 percent lower than the previous year but still 13.3 percent higher than the five year average. Producers have managed to clean up some of the backlog created last year although overall supplies still remain large.

The inventory of b/s chicken breasts was 186.2 million pounds, 7.6 percent lower than a year ago but still about 8.8 percent higher than the five year average. The inventory of whole turkeys at the end of February was 214.8 million pounds, 14.1 percent higher than a year ago and 37.6 percent higher than the five year average.

Industry continues to struggle with a backlog of product and the inventory build in February was higher than average. Breast meat inventory at 107.3 million pounds is 5.8 percent higher than last year.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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