The U.S. Department of Agriculture's latest “Cold Storage” report showed that there is plenty of meat in cold storage, which Len Steiner noted in the “Daily Livestock Report” may keep prices in check in the short term.
Total beef, pork and poultry supplies in refrigerated warehouses at the end of September were estimated at 2.443 billion lb., 1.6% larger than the previous month and 11% higher than the five-year average. Inventory in September was up 2.1% compared to the previous month and higher than the five-year average increase of just 0.2%.
Steiner pointed out that boneless beef stocks jumped 9% from the previous month, compared to a five-year average monthly build of just 3.3%.
“It should be noted that the increase in inventories comes at a time when U.S. beef imports have declined sharply, implying that significantly more domestic boneless beef is ending up in cold storage. This should dampen demand for some beef products in the short term,” Steiner said.
While USDA does specify what kind of product is in cold storage, Steiner suspects that part of the reason for the increase is the oversupply of fat beef trim. “Some of this product likely is going into the freezer, but it has a relatively short shelf life and, we think, is negatively impacting price expectations for later this year and into January-February,” he added.
Total pork inventories were 642 million lb., a 5.4% increase from the previous month. Steiner noted that this is a much faster inventory build than normal for this time of year. However, total pork inventories are still about 2.1% lower than a year ago.
“Given the big increase in slaughter in August and September, it is quite impressive that cold storage stocks are lower than last year," Steiner said. "We think overall demand for pork remains in good shape, and packers have been quite successful in keeping the flow of product moving through the various channels.”
According to Steiner, increased exports likely have helped, with September exports currently pegged to be up 9% from last year. However, not all is good in the pork complex, he said, explaining that slaughter in October is expected to be even bigger, while exports are showing signs of slowing down.
“We expect pork inventories to increase further in October," Steiner said. "For now, however, we think markets will view the current report as generally neutral for prices in the short term.”
USDA reported total chicken inventories at 768.7 million lb., 3.9% lower than a year ago but still 15.1% higher than the five-year average. Inventory depletion was generally in line with what is typically seen at this time of year, Steiner said.
“Inventories of leg quarters are now down 18.9%, helped, in large part, by resurgent chicken exports. Breast meat inventories, on the other hand, are still up 7.3% from last year and 29% higher than the five-year average,” he said.