Frozen Meat Stocks Could Cap Livestock Rallies

Total meat supplies in cold storage at the end of August were well above the 2010-2014 average, according to USDA’s National Agricultural Statistics Service’s monthly Cold Storage report, which was released on Friday.  This is liable to keep live animal price gains in check, at least for a while.

Frozen beef supplies remained above last year for the second straight month, while pork stocks continued to track below year-earlier numbers.  Poultry inventories were above last year but fell from the annual high that was set at the end of July.




Beef stocks in cold storage continued their contra-seasonal rise in August.  This began in April, and each month, the gap widens between the latest month’s cold storage stocks and the five-year average of inventories.

Beef stocks at the end of August was reported at 476.619 million pounds, up 6.3 million, or 1.34%, above last year’s 470.319 million.  But it was up 71.491 million, or 17.6%, from the 2010-2014 average of 405.128 million.

Beef inventories this year are not following the trend of either last year or the five-year average as heavy slaughter weights and increased feedlot sales to packers combine to overwhelm spot consumption and export demand.

Earlier in the year, beef inventories were declining at a faster-than-normal clip as cattle were being held on feed to gain all the weight the packers would stand before incurring penalties for being too big.  Unprofitable feeding margins and a strong futures market prompted them to feed the cattle for longer periods to get the most return per animal.

Much of that changed as futures prices became stronger in nearby delivery months, telling feeders the market wanted their cattle now rather than later.  Sellers responded, and inventories grew.




But while beef stocks are going their own way, pork inventories are following the 2015 trend, although at a lower level.  Frozen stocks also are beginning to narrow the gap with the 2010-2014 average.

Pork inventories at the end of August were listed at 607.254 million pounds, 46.506 million, or 7.11%, below last year’s 653.760 million.  However, they were 105.328 million, or 21.0%, more than the previous five-year average of 501.926 million.

If frozen pork supplies continue to follow the 2015 trend, the gap with the 2010-2014 average will narrow considerably in the coming months.  And a case could be made for increased pork consumption in the form of hams for the holiday season.




Total poultry on ice at the end of August was down from its 2016 peak in July but remained well above last year and the 2010-2014 average.  This decline was entirely in chicken supplies as turkey stocks continued to track the five-year line and likely peaked for the year.

Turkey inventories will decline seasonally as frozen birds are transferred to grocery stores and then to consumers.




Cash cattle markets Friday were quiet after trading Wednesday $2 to $3 lower at $103 to mostly $104 per cwt on a live basis and at $162 to mostly $163 dressed.

The USDA’s choice cutout Friday was $2.42 per cwt lower at $187.35, while select was off $1.07 at $177.87.  The choice/select spread narrowed to $9.48 from $10.83 with only 69 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Thursday was $133.95 per cwt, down $0.93.  This compares with the Sep settlement Friday of $133.95, down $0.27, and the Oct settlement of $123.15, down $4.35.