Cold Storage Shows Chicken Could Pressure Red Meat

The USDA’s monthly Cold Storage report Thursday showed the amount of red meat in cold storage went down last month as pork and beef tonnage fell, although the total remains well above last year and the previous five-year average.

The Storage report is less of a market influence than other reports, and market analysts said this one also may have little to no influence on the markets.  However, the volume of frozen meat surprised some traders who considered the report mildly bearish.

Beef, pork and chicken inventories are record large for the month as exports are trimmed by a strong US Dollar and increased production of pork and chicken.

But the volume of chicken locked away in the nation’s freezers could be a concern to cattle and hog markets since the March total took a counter-seasonal turn higher.  And while supplies could pull back as production is trimmed by bird flu outbreaks and the culling of millions of birds, the fact remains that chicken stocks are record large and growing.

The USDA Thursday released its monthly Cold Storage report that showed total red meat on ice amounted to 1.191 billion pounds, down 77 million, or 6.29%, from 1.224 billion at the end of February.  However, this was 175 million, or 17.3%, above the 2014 month’s figure of 1.012 billion.  It also was 116 million, or 10.9%, above the previous five-year average of 1.065 billion.

 

CHICKEN POISED TO CHALLENGE MARKET SHARE

 

And while red meat supplies are record large for the month, its chicken that poses a real thread to beef and pork.

While beef is still king of the retail meat case, many consider chicken to be a stronger contender for the throne than pork.  Sales figures over time show a greater relationship between beef and chicken sales than between beef and pork.

 

CASH CATTLE MARKET TRADES LOWER

 

Cash cattle markets Wednesday traded lower to a range of $157.50 to mostly $158 per cwt on a live basis and at mostly $253 up to $254 on a dressed basis.  These prices were $3 to $6 below the full range of last week’s trades at mostly $160 to $161 live and $256 to $260 dressed.

For the week to date, the USDA reported average prices in the five-area field at $157.25 to $159 on a live basis and $253.07 to $253.09 on a dressed basis.

The USDA’s beef cutout value Wednesday was narrowly mixed with the choice cutout at $260.06 per cwt, up $0.24 from Tuesday and select at $249.52, down $0.03.  Volume was active with 128 loads of fabricated product being sold into the spot market.

Week-to-date cattle slaughter was pegged at 330,000 head, up from 327,000 in the same period last week but down from 336,000 in the year-ago period.

The CME Feeder Cattle Index for the seven days ended Tuesday was down $0.95 per cwt to $216.53, compared with Wednesday’s settlement of the Apr futures contract at $212.55, down $0.10.