Cold Storage Seen Bullish For Cattle

Thursday’s Cold Storage report from the USDA’s National Agricultural Statistics Service was bullish for cattle futures and neutral to friendly for lean hog futures, Market analysts said.

On-hand supplies of beef, pork and pork bellies on May 31 were down significantly from a month ago and a year ago.  One mitigating factor for red meat markets, though, could be frozen poultry supplies, which were up from a month earlier and a year ago, but a closer look shows this to be all turkey supplies, which are not as significant a competitor to beef and pork as chicken.




Total red meat supplies were 1.048 billion pounds, down 49 million, or 4.47%, from 1.097 billion the previous month and down 81 million, or 7.17%, from last year’s 1.129 billion.

Total pounds of beef in freezers, at 412.9 million pounds, were down 45.5 million, or 9.93%, from 458.4 million the previous month and down 48.8 million, or 10.6%, from 461.7 million last year.

It is common for beef supplies to fall away in April and then keep declining, only to bottom in August, according to NASS data compiled by the Livestock Marketing Information Center.  In the 2011-2015 average, this decline amounted to 49.837 million pounds, or 10.6%.

Last year, however, was different.  Then, the annual low in beef supplies came in May at 461.7 million pounds.  From there, it moved to the annual high of 567.9 million pounds in December.

A repeat of last year’s upswing in frozen beef stocks could come with higher production this year from a larger supply of slaughter cattle, assuming dressed weights don’t fall away to make up for the increased kill numbers.

Total frozen pork supplies were down 2.9 million pounds, or 0.49%, to 592.1 million pounds from April 30’s 595.0 million and down 24 million, or 3.90% from last year’s 616.1 million.

Pork poundage in cold storage is following the 2011-2015 average pretty well, just at a lower level.  If it continues the trend, April stocks, at 599.1 million pounds, will be the high of the year.

Further pork supply declines can be expected into July.  This will be followed by two months of gains and a decline into the December low.

Stocks of pork bellies, at 31.6 million pounds, were down 1.9 million, or 5.67%, from 33.5 million last month and down 46.1 million, or 59.3%, from 77.7 million last year.




Total frozen poultry supplies on May 31 were up 4% from April 30 and up 4% from a year earlier.

Total chicken stocks, at 785.3 million pounds, were down 11.3 million, or 1.41%, from 796.6 million the previous month and down 21.3 million, or 2.65%, from 806.6 million last year.

Total pounds of turkey in freezers, at 533.6 million pounds, were up 62.1 million, or 13.7%, from 471.5 million last month and up 79.4 million, or 17.5%, from 454.1 million a year ago.




Fed cattle sold on the livestock exchange video auction Wednesday at $123.00 per cwt for one- to nine-day delivery, down from $138.82 on June 8, the last time trading was reported on the exchange.

Cash cattle traded Wednesday at $122 to $123 per cwt on a live basis, down $10 from $132 to $133 last week, and at $195 to $196 dressed, down $9 to $10.

The USDA’s choice cutout Thursday was down $2.54 per cwt at $242.88, while select was off $1.98 at $216.92.  The choice/select spread narrowed to $25.96 from $26.52 with 95 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Wednesday was $148.18 per cwt, up $0.11.  This compares with Thursday’s Aug settlement at $143.45, down $1.20.