Cold Storage Report Holds Bearish Implications

Total US frozen red meat and chicken supplies rose to record highs in September, a fact that could have bearish implications for cattle, hog and chicken markets down the road.

The USDA Thursday reported total frozen red meat supplies Sep. 30 were up 2% from August at 1.2 billion pounds and up 24% from last year’s 970.8 million.

Total pounds of beef on ice rose 6% from a month earlier to a September record of 496.4 million pounds, and were up 31% from last year’s 378.2 million.

Frozen pork supplies were up slightly from the previous month at 656.4 million pounds but were up 19% from last year’s 550.6 million.  This also is a record high for September.

Total frozen poultry supplies were down slightly from August at 1.261 billion pounds because of a 5% seasonal drawdown in turkey storage.  However, the total was up 13% from a year ago when it registered 1.205 billion.

Total stocks of chicken were up 2% on the month to 799.8 million pounds and up 28% from last year’s 668.6 million.




With the Cold Storage report out of the way, investors and hedgers will be looking to the Friday afternoon release of the monthly Cattle-on-Feed report, which shows population changes and totals for US feedlots with 1,000 head or more of capacity.

Of particular importance in the on-feed report will be the number of cattle placed on feed during September as pastures were fading seasonally.  The Reuters survey showed traders expect 1.921 million head entered feedlots during the month, a decline of 4.6% from a year earlier.

The range of placement estimates in the survey varied widely, with one analyst standing out with an expected 4.4% increase.  All other analysts in the survey expected a decline of 2.1% to 8.8%.

The number of calves entering feedlots is important because it gives a glimpse of available supplies of younger cattle and producer intentions entering the fall and winter seasons.  It also gives further insight into the number of fed cattle that eventually go to slaughter.

However, the USDA report may not give an accurate picture of total feedlot placements.  Anecdotal reports of smaller western Midwest feedlots with capacities of fewer than the 1,000-head reopening are growing.  These lots, with their lower corn and distillers grains costs, will siphon off feeder cattle that the market will not see until they go to slaughter.

Weight ranges of placed cattle also will be watched carefully.  Over the summer, placement weights have risen as pasture conditions allowed growth to heavier weights.  With favorable temperatures and rainfall, many of the pastures were able to support extra grazing this year, allowing calves to be sold at the heavier weights.

If placement weights decline in the report, it will mean grazing availability is fading, and an increasing percentage of the calves have no place to go but to the feedlots.  If placement weights remain high, it could mean that producers have forage available either in the form of hay, wheat pasture and/or silage that they intend to “walk off the farm” later in the form of larger feeder cattle.




Cash fed cattle markets were quiet Thursday with light packer bids of $137 per cwt on a live basis and asking prices at $140 to $145 live and $207 or higher dressed.

Prices last week were mostly $134 to $136 per cwt on a live basis, well up from $123 to mostly $126 to $127 the previous week.  On a dressed basis, cattle traded from $205 to $214.50.

Wholesale beef prices Thursday were mixed.  The USDA reported its choice cutout value at $217.47 per cwt, up $0.98 on the day, and its select cutout at $209.87, off $0.12.

The choice/select spread widened to $7.60 from $6.50 on Wednesday, and there were 95 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was $192.07, up $1.18.  This compares with the Oct settlement Thursday of $195.55, up $1.30.