The USDA’s Cold Storage report Monday was considered slightly bearish for beef, pork and chicken markets as it showed more of all three on ice than a year ago, but less than a month ago.
The monthly decline of beef and pork in cold storage is seasonal and is holding the lines evenly above last year and the seasonal average.
But the monthly decline of the amount of chicken in cold storage is different. Last year, there was an increase in frozen supplies from April’s annual low into May followed by a dip into June. The previous five-year average shows the same bump and decline.
This year, frozen inventories have grown every month and remain well above a year ago and the average. A dip in supplies might not seem so bullish since export opportunities have been cut by avian influenza, and supplies of chicken are expected to remain well above last year and the average.
BEEF SUPPLIES UP
Despite lower weekly beef production linked to tight supplies of slaughter cattle, supplies of beef in cold storage remain above a year ago and the previous five-year average.
The USDA Monday reported 468.56 million pounds of beef and beef cuts in cold storage in May, 3% less than April’s 484.294 million but 24% more than last year’s 377.643 million.
That might seem confusing to the markets, but when traders consider that monthly beef supplies usually decline at this time of year, they are liable to concentrate on the 24% year-over-year increase.
MONTHLY PORK SUPPLIES DOWN SEASONALLY
Monthly pork supplies in cold storage tend to decline into an annual low in July, although last year, inventories made their annual low in November.
The USDA reported total pork in cold storage at 653.636 million pounds, down 7% from April’s 701.083 million but up 14% from 2014’s 575.818 million.
The annual peak in supplies is in April so a monthly decline into May likely will be discounted by the market. The continued supply bulge from last year and the average are liable to be considered more carefully.
Overall, supplies of red meat on ice remain above last year and the average, and the differences may remain large. Pork production is up as more pigs come to slaughter as the industry gets a handle on Porcine Epidemic Diarrhea.
Beef production is down, but high prices may be dissuading retail featuring and sales.
CROP CONDITIONS BOG DOWN
Crop conditions last week showed the effects of too much water, and grain markets overnight are up as a result. Good-to-excellent corn ratings fell 2% from last week to 71%, and were 3 percentage points behind last year and the five-year average.
Soybean planting advanced only 3% to 90% done, compared with the 95% average and the 92% that traders expected.
Significant soybean planting was seen in Kansas and Missouri, but these states remain well behind normal.
And the wheat harvest is falling behind. Farmers progressed 8% from a week ago, but the total harvest, at 19% complete is behind the 31% average.
CASH CATTLE TRADE QUIET
Cash cattle markets were quiet Monday. Asking prices were expected to surface at $153 per cwt on a live basis and $245 dressed. Last week cattle traded at $148 to $150 live and at $238 to $242 dressed.
Wholesale beef prices were up again on Monday for the sixth straight day, with the USDA reporting its choice cutout value at $253.04 per cwt, up $1.72, and its select cutout at $248.06, up $1.83. Volume was moderate with 95 loads of fabricated product moving into the spot market.
The CME Feeder Cattle Index for the seven days ended Friday was $228.03 per cwt, up $2.39, compared with Monday’s Aug settlement of $225.77.