Meat Stores Could Cap Beef, Cattle Gains

If beef and fed cattle prices are moving higher in the short term, gains likely will be capped by rising volumes of red meat in cold storage.

The USDA’s National Agricultural Statistics Service released its monthly Cold Storage report Tuesday.  It showed that total red meat stocks in US freezers as of Jan. 31 were up 9% from December and up 7% from a year earlier.

Total pounds of beef on ice, at 518.5 million pounds, were up 5.939 million, or 1.16% from December’s 512.524 million and up 26.5 million, or 5.38%, from a year earlier when it was 491.997 million.  Total pounds of beef were a record high for January since data began to be recorded in 1915.

Total frozen pork supplies on Jan. 31 were 637.0 million pounds, up 91.34 million, or 16.7%, from December’s 545.696 million and up 41.4 million, or 6.94%, from last year’s 595.673 million, NASS said.  Total pork in cold storage also was a record high for January.

Stocks of pork bellies were up 14% from December and up 13% from a year earlier.

Total stocks of chicken were 824.8 million pounds on Jan. 31, down 36.825 million, or 4.27%, from 861.6 million the December report but were up 94.086 million, or 12.9%, from last year’s 730.7 million, NASS said.

Total pounds of turkey also were up, jumping 44% from December and 3% from a year earlier.  However, turkey stocks rarely compete with beef outside of some holiday events and mid-summer deli demand.

 

COLD STORAGE BEEF CONTINUES GROWTH

 

The amount of beef in cold storage really began to grow starting in September of 2014, NASS data show.  Prior to September 2014, beef stocks were declining faster than the previous five-year average.

That growth was hidden somewhat in the first half of last year as seasonal demand reduced monthly stores, but supplies remained above the average, beginning their own stronger-than-normal growth in the second half.

Cold storage supplies of beef typically rise in the January report from December, and there is a strong seasonal move toward decreasing storehouse stocks into summer.  If last year’s pattern follows, monthly cold-storage beef supplies will move lower, but remain above last year and the previous five-year average all year.

 

FROZEN PORK SUPPLIES GROWING

 

The amount of pork in cold storage typically jumps in the January from the December.  Stocks continue to grow through February when they dip in March before rising to the annual high on April 30.

Iced pork supplies are in synch with the normal pattern, but the record January total bodes ill for beef prices.

Last year, pork supplies tended to follow the average pattern, but at a much higher level.  Market analysts through the year cited high levels of competing meats in the nation’s freezers for keeping beef prices in check and by extension, cattle prices.

If pork supplies remain at lofty levels compared with previous years, they could be used again this year to limit beef and cattle price gains.

 

CASH CATTLE REMAIN QUIET

 

Cash cattle markets in the Plains Tuesday remained quiet with no trading reported.  The USDA reported 35 head of steers sold at $135 per cwt on a live basis, but this is not enough to establish a market.

Almost no packer bids were reported in the Plains although there were rumors of some bids at $134 per cwt on a live basis here and there.  Asking prices were reported around $138 to $150.

In Nebraska’s dressed market, cattle were bid at $210 per cwt, but feedlots were asking $215.

Cattle last week traded $1 to $2 per cwt higher at $132 to mostly $134 on a live basis.  Dressed-basis prices were around $208 to $210, $2 to $4 higher.

The USDA reported higher wholesale beef prices again Tuesday, with choice up $1.86 per cwt at $215.14, and select up $2.50 at $212.30.  The choice/select spread narrowed to $2.84 from $3.48, and there were 95 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $158.27 per cwt, up $0.17.  This compares with Mar’s Tuesday settlement of $157.03, up $1.85.