USDA's November Cold Storage report, released Friday afternoon, will likely hit livestock markets as somewhat bullish on Monday, with that sentiment probably greatest for pork.
October is almost always the largest pork production month of the year due to higher fall slaughter and the fact October contains no holidays. So, lower frozen pork inventories on October 31 versus September 30, especially in a year that has seen as many difficulties as has 2009 is a positive sign — and October 31 frozen pork stocks of 520.13 million pounds were 1.6% lower than one month earlier.
The big drivers of the monthly decline were hams (down 13% ) and “Other” (down 12.3%). Stocks of trimmings, variety meats and bellies were slightly lower than at the end of September while inventories of loins, ribs, butts and picnics were significantly higher. Hams stocks were also the big reason for lower pork inventories versus one year ago at 15.8%.
The one possible fly in the bullish ointment would be belly inventories at 37.006 million pounds, 70.6% higher than last year. The amount of ribs in storage on October 31 (68.094 million pounds, 20.7% more than last year and 26.1% more than last month) is a symptom of the slow pace of recovery in the food service sector which accounts for a large portion of the sales of pork ribs in the U.S. Bellies are a likely casualty of a slow food service sector as well.
Chicken inventories continue to be far smaller than one year ago with total chicken stocks at 632.274 million pounds, down 19.8%. The biggest drivers of the year-on-year decline were legs, leg quarters and thighs — generally export products. Stocks of breast meat which is almost exclusively sold within the U.S. were sharply lower than last yea as well, signaling some positive impact of output reductions in the broiler sector.
Even the “Other” category, which is comprised of many processed chicken items and accounts for over 50% of total chicken in freezers in most months, was 8.9% lower this year versus last year. Total chicken stocks were virtually unchanged from last month.
Beef stocks were nearly 10% smaller than last year with beef cuts accounting for a larger percentage but boneless beef accounting for a MUCH larger unit reduction. No surprise there since boneless beef usually accounts for 80-plu percent of all beef in freezers. Beef stocks were also virtually unchanged from last month.
Finally, the amount of turkey in freezers on November 1 (510.896 million pounds) was 11.6% lower than one year ago. The year-on-year comparisons are far more meaningful than month-to-month comparisons for turkey since turkey stocks are so severely seasonal. That is, turkey stocks A:WAYS drop sharply in October, the question is “How do stocks compare to last year?” The answer is “relatively tight” as the turkey sector has reduced production much more aggressively than any other meat/poultry sector.
We warned last summer that, without sharp reductions in output or a huge increase in movements, turkey stocks could be very large this fall. It looks like a combination of the two has occurred to get stocks below year-earlier levels.
Friday also marked the release of USDA's monthly Cattle on Feed report which indicated that, on November1, 11.134 million head of cattle were in U.S. feedlots with inventories of 1000 head and more. That number is 1.5% higher than last year, marking the second straight month of higher year-on-year on-feed numbers.
The increase was very close to the average of analysts’ pre-report estimates. October marketings numbered 1.755 million head, 3.2% lower than one year ago but within 0.4% of analysts’ estimates. Those two numbers will be neutral to Monday’s trade. October placements, though, may well be bullish. 2.474 million head were placed in October, 1.5% more than last year but analysts expected that number to be 2.6% larger. Smaller placements in October imply lower fed cattle supplies in March and April. The cattle placed in October weighed, on average, 687.4 lbs., a weight that is sharply lower than the 716-lb. average weights of both August and September but is still 10 lbs. heavier than the cattle placed in October 2008. The relatively high weight of the cattle going in to feedlots suggests continued high slaughter weights next spring, potentially offsetting some of the bullish sentiment of lower-than-expected placements.
Source: usda.com
Back to News Headlines