Cold Storage Report Thought Slightly Bearish

USDA’s monthly Cold Storage report Thursday was considered neutral to bearish for beef as it stoked the fires of market concerns about beef demand.  It might have been more bearish if such fears were not already pressuring cattle prices.

The report showed total pounds of beef in freezers, at 467.136 million pounds, were down 9.165 million, or 1.92% from the previous month but up 108.967 million, or 30.4% from last year’s 358.169 million.

But while total beef in cold storage is up sharply from a year ago, it doesn’t tell the whole story.  Graphing the results of the monthly report over several years provides a better picture.  A graph from the Livestock Marketing Information Center shows that while frozen beef stores are shockingly higher than last year, stocks then were dropping rapidly and were well below the average of the previous five years.

In fact, comparing June’s total frozen beef supplies to the previous five year average, shows them to be 28.782 million pounds, or 6.57%, above the average and holding at about that same level all year.

The real gains in cold-storage beef supplies came in the boneless product, which includes all boxed boneless beef, such as ground beef, roasts, steaks, loins, strips, rounds and trimmings.  These cuts were up about 34% from a year ago at 429.702 million pounds.

The boneless category is so broad that it’s hard to get a handle on beef demand.  However, factoring in a 1% year-over-year decline in bone-in product, which takes in the boxed primal cuts, it can be inferred that a growing number of grocers are purchasing the primals and fashioning them into meat-case products in-store.

 

PORK SUPPLIES UP

 

Part of the report’s bearish implications for beef lie in the continued increase in frozen pork supplies.  The June report showed total 2015 pork supplies at 632.209 million pounds, up 94.762 million, or 17.6%, from last year but down 22.562 million, or 3.45%, from May.

However, the year-over-year gain was largely due to ham stocks, which were up 53.5 million pounds; loins were up 10 million, and spareribs were up 13.1 million.

US June 30 belly stocks were down 39.4 million pounds at 44.5 million.  Belly prices continue to advance, but many expected them to forge a seasonal high in the next few weeks.

Total frozen pork supplies jumped above last year in February and haven’t looked back.  The pattern appears to be following the previous five-year average, albeit at a higher level.

 

CASH CATTLE MARKET QUIET

 

Cash fed cattle markets Wednesday remained quiet with the USDA reporting isolated sales this week at $147 to $148 per cwt on a live basis and at $232 dressed.  While volumes aren’t large enough to establish a real trend, many will infer that the steady-to-$1-lower trades bespeak a weaker cash market, just as futures movement predicted.

Otherwise, bids were reported at $145 per cwt on a live basis in Kansas and Nebraska against asking prices of $150.  Bids in Nebraska’s dressed market were reported at $232 to $234 with asking prices around $240.

Cattle prices last week fell about $2 per cwt to mostly $148 on a live basis.  Cattle in dressed-basis markets sold for $234 to $236, down $2 to $4.  Trading was thought to be moderately active.

The USDA’s beef cutout value Wednesday was lower, with the choice product at $232.92 per cwt, down $0.40.  Select was reported at $228.35, off $1.66.

The CME Feeder Cattle Index for the seven days ended Tuesday was $217.14 per cwt, down $0.48, and well above the Aug contract settlement of $212.37.