Sponsored by
Sponsored by
Vol. 14, No. 126 / June 28, 2016 Much of our discussion in yesterday’s report focused on the feedlot inventory numbers and hog supplies. Below we will expand a bit more on the cold storage report and some of its implica ons. We do not mean to sound tone deaf with regard to what is happening in the broader macro markets, they are cri cal and we plan to review but frankly it is a bit silly for us to engage in another round of what ifs. There is plenty of pundits on 24 hour cable shows doing just that. At this point we want to get a bit more perspec ve with regard to two things that are acutely important for livestock producers. First, happens with the value of the US currency (a lot of guessing here about the path of future interest rates and risk-off trades). Second, what happens with global growth and how that impacts meat demand. More on both in our reports later this week. Cold Storage Stocks Situa on: Total meat protein supplies in cold storage con nued to increase in May but the increase was in line with the normal build in stocks for this me of year. Total beef, pork and poultry supplies in cold storage were 2.318 billion pounds, 1% higher than the previous month. The five year average m/m build is about 1.6%. Current cold storage stocks of all proteins are just 0.3% higher than a year ago but 4.1% higher than the five year average. Beef in cold storage was es mated at 446.7 million pounds, 5.9% lower than a year ago. Seasonally beef stocks decline at this me of year and so far the drawdown is in line with the long run trend. As a result we see the results of the survey as neutral for the beef market in the short term. Total pork inventories at the end of May were 612.7 million pounds, 6.5% lower than a year ago and 0.4% lower than the five year average. It is posi ve for pork demand we think that pork stocks declined 3.9% from the previous month even as pork produc on remains above year ago levels. The rate of stock drawdown was in line with normal levels for this me of year, hence our assessment of the current report as neutral for the pork market. Ham inventories are down 9.1% from a year ago, which should help support prices in the next three months. S ll, we would not read more than that in the report. Part of the reason why end users are not anxious to build inventories for the holiday season is because pork supplies should be more than adequate this year. Pork belly stocks in May were 77.7 million pounds, 19.9% higher than a year ago and 18.3% higher than the five year average. This was by far the most bearish number for pork. The increase coincides with rela vely weak prices for bellies during May. It appears that packers were willing to put some product away in order to support the market. This may be a good strategy if summer demand materializes but the supply increase also may help keep belly prices in check and we see it as nega ve for the pork complex in July and par cularly August. Without robust belly prices in
MILLION POUNDS
Red Meat and Poultry in Cold Storage. USDA Combined Inventory of Beef, Pork and Poultry in Refrigerated Warehouses
2,500 2,400 2,300 2,200 2,100 2,000
,
1,900
5-Year Average
1,800
2011 - 2015
2015
2016
1,700
JAN
FEB
MILLION POUNDS
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT NOV
DEC
ALL CHICKEN, COLD STORAGE STOCKS END OF MONTH INVENTORIES, USDA
920,000
840,000
760,000 ,
680,000
600,000
520,000 JAN
FEB
MAR
5-Year Average
APR
MAY
JUN
2011 - 2015
JUL
AUG
SEP
2015
OCT NOV
DEC
2016
July and August it will be difficult to hit the rather lo y prices that futures have been pricing to this point. Chicken inventories remain burdensome. Total chicken supplies at the end of May were 803.2 million pounds, 8.6% higher than a year ago and 19.1% higher than the five year average. Breast meat inventories were 182.6 million pounds, 24.8% higher than a year ago and 43.2% higher than the five year average. The supply of broiler wings also is burdensome. Total cold storage stocks of wings were es mated at 82.0 million pounds, 85.7% higher than a year ago and 33.7% higher than the five year average. Turkey breast inventories are building fast as producers resist selling in the currently very depressed market. This may work in the short term but it also tends to temper the normal seasonal increase that we normally see in the fall.
The Daily Livestock Report is made possible with support from readers like you. If you enjoy this report, find it valuable and would like to sustain it going forward, consider becoming a contributor. Just go to www.DailyLivestockReport.com to contribute by credit card or send your check to The Daily Livestock Report, P.O. Box 4872, Manchester, NH 03018
Thank you for your support! The Daily Livestock Report is published by Steve Meyer & Len Steiner, Inc., Merrimack, NH. To subscribe, support or unsubscribe visit www.dailylivestockreport.com. Copyright © 2015 Steve Meyer and Len Steiner, Inc. All rights reserved. The Daily Livestock Report is not owned, controlled, endorsed or sold by CME Group Inc. or its affiliates and CME Group Inc. and its affiliates disclaim any and all responsibility for the informa on contained herein. CME Group®, CME® and the Globe logo are trademarks of Chicago Mercan le Exchange, Inc. Disclaimer: The Daily Livestock Report is intended solely for informa on purposes and is not to be construed, under any circumstances, by implica on or otherwise, as an offer to sell or a solicitaon to buy or trade any commodi es or securi es whatsoever. Informa on is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projec ons of future condi ons are a empted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indica on of future performance. Futures are a leveraged investment, and because only a percentage of a contract’s value is require to trade, it is possible to lose more than the amount of money ini ally deposited for a futures posi on. Therefore, traders should only use funds that they can afford to lose without affec ng their lifestyle. And only a por on of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade.
Page 2
Sponsored by Vol. 14, No. 126 / June 28, 2016
USDA STOCKS IN COLD STORAGE REPORT COMMODITY
Stocks in All Warehouses 31-May-15
30-Apr-16
Percent Of 31-May-16
May-15
Apr-16
1,000 Pounds Frozen Pork Picnics, Bone-In Hams, Total Bone-in Boneless Bellies Loins, Total Bone-in Boneless Ribs Butts Trimmings Other Variety Meats Unclassified
10,867 158,882 63,780 95,102 64,805 39,360 14,488 24,872 89,290 20,177 50,740 98,086 45,409 77,685
11,470 130,217 58,537 71,680 72,592 43,536 14,451 29,085 138,117 19,172 40,991 82,891 49,429 48,905
9,908 144,415 70,728 73,687 77,683 37,290 11,673 25,617 109,999 16,335 40,799 79,992 48,278 48,016
91 91 111 77 120 95 81 103 123 81 80 82 106 62
86 111 121 103 107 86 81 88 80 85 100 97 98 98
Total
655,301
637,320
612,715
94
96
Frozen Beef Boneless Beef Cuts
435,436 39,171
418,092 35,007
410,435 36,273
94 93
98 104
Total
474,607
453,099
446,708
94
99
Other Veal Lamb & Mutton
4,676 38,360
6,191 39,787
6,483 44,816
139 117
105 113
Total
43,036
45,978
51,299
119
112
1,172,944
1,136,397
1,110,722
95
98
Chicken Broilers, Fryers, Roasters Breasts and Breast Meat Leg Quarters Wings Other Chicken
17,116 146,329 166,213 44,175 365,556
23,204 187,316 110,991 78,826 404,617
20,203 182,653 113,947 82,046 404,377
118 125 69 186 111
87 98 103 104 100
Total
739,389
804,954
803,226
109
100
Turkey Whole Turkeys Turkey Breast Other
252,696 54,981 133,711
182,080 70,058 146,581
216,397 80,342 158,423
86 146 118
119 115 108
Total
441,388
398,719
455,162
103
114
6,743
10,412
8,605
128
83
1,187,520
1,214,085
1,266,993
107
104
Total Red Meat
Ducks Total Poultry
The Daily Livestock Report is made possible with support from readers like you. If you enjoy reading this report and would like to sustain it going forward, consider becoming a contributor by going to our website: www.DailyLivestockReport.com
Thank you for your support!
Vol. 14, No. 126 / June 28, 2016 Much of our discussion in yesterday’s report focused on the feedlot inventory numbers and hog supplies. Below we will expand a bit more on the cold storage report and some of its implica ons. We do not mean to sound tone deaf with regard to what is happening in the broader macro markets, they are cri cal and we plan to review but frankly it is a bit silly for us to engage in another round of what ifs. There is plenty of pundits on 24 hour cable shows doing just that. At this point we want to get a bit more perspec ve with regard to two things that are acutely important for livestock producers. First, happens with the value of the US currency (a lot of guessing here about the path of future interest rates and risk-off trades). Second, what happens with global growth and how that impacts meat demand. More on both in our reports later this week. Cold Storage Stocks Situa on: Total meat protein supplies in cold storage con nued to increase in May but the increase was in line with the normal build in stocks for this me of year. Total beef, pork and poultry supplies in cold storage were 2.318 billion pounds, 1% higher than the previous month. The five year average m/m build is about 1.6%. Current cold storage stocks of all proteins are just 0.3% higher than a year ago but 4.1% higher than the five year average. Beef in cold storage was es mated at 446.7 million pounds, 5.9% lower than a year ago. Seasonally beef stocks decline at this me of year and so far the drawdown is in line with the long run trend. As a result we see the results of the survey as neutral for the beef market in the short term. Total pork inventories at the end of May were 612.7 million pounds, 6.5% lower than a year ago and 0.4% lower than the five year average. It is posi ve for pork demand we think that pork stocks declined 3.9% from the previous month even as pork produc on remains above year ago levels. The rate of stock drawdown was in line with normal levels for this me of year, hence our assessment of the current report as neutral for the pork market. Ham inventories are down 9.1% from a year ago, which should help support prices in the next three months. S ll, we would not read more than that in the report. Part of the reason why end users are not anxious to build inventories for the holiday season is because pork supplies should be more than adequate this year. Pork belly stocks in May were 77.7 million pounds, 19.9% higher than a year ago and 18.3% higher than the five year average. This was by far the most bearish number for pork. The increase coincides with rela vely weak prices for bellies during May. It appears that packers were willing to put some product away in order to support the market. This may be a good strategy if summer demand materializes but the supply increase also may help keep belly prices in check and we see it as nega ve for the pork complex in July and par cularly August. Without robust belly prices in
MILLION POUNDS
Red Meat and Poultry in Cold Storage. USDA Combined Inventory of Beef, Pork and Poultry in Refrigerated Warehouses
2,500 2,400 2,300 2,200 2,100 2,000
,
1,900
5-Year Average
1,800
2011 - 2015
2015
2016
1,700
JAN
FEB
MILLION POUNDS
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT NOV
DEC
ALL CHICKEN, COLD STORAGE STOCKS END OF MONTH INVENTORIES, USDA
920,000
840,000
760,000 ,
680,000
600,000
520,000 JAN
FEB
MAR
5-Year Average
APR
MAY
JUN
2011 - 2015
JUL
AUG
SEP
2015
OCT NOV
DEC
2016
July and August it will be difficult to hit the rather lo y prices that futures have been pricing to this point. Chicken inventories remain burdensome. Total chicken supplies at the end of May were 803.2 million pounds, 8.6% higher than a year ago and 19.1% higher than the five year average. Breast meat inventories were 182.6 million pounds, 24.8% higher than a year ago and 43.2% higher than the five year average. The supply of broiler wings also is burdensome. Total cold storage stocks of wings were es mated at 82.0 million pounds, 85.7% higher than a year ago and 33.7% higher than the five year average. Turkey breast inventories are building fast as producers resist selling in the currently very depressed market. This may work in the short term but it also tends to temper the normal seasonal increase that we normally see in the fall.
The Daily Livestock Report is made possible with support from readers like you. If you enjoy this report, find it valuable and would like to sustain it going forward, consider becoming a contributor. Just go to www.DailyLivestockReport.com to contribute by credit card or send your check to The Daily Livestock Report, P.O. Box 4872, Manchester, NH 03018
Thank you for your support! The Daily Livestock Report is published by Steve Meyer & Len Steiner, Inc., Merrimack, NH. To subscribe, support or unsubscribe visit www.dailylivestockreport.com. Copyright © 2015 Steve Meyer and Len Steiner, Inc. All rights reserved. The Daily Livestock Report is not owned, controlled, endorsed or sold by CME Group Inc. or its affiliates and CME Group Inc. and its affiliates disclaim any and all responsibility for the informa on contained herein. CME Group®, CME® and the Globe logo are trademarks of Chicago Mercan le Exchange, Inc. Disclaimer: The Daily Livestock Report is intended solely for informa on purposes and is not to be construed, under any circumstances, by implica on or otherwise, as an offer to sell or a solicitaon to buy or trade any commodi es or securi es whatsoever. Informa on is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projec ons of future condi ons are a empted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indica on of future performance. Futures are a leveraged investment, and because only a percentage of a contract’s value is require to trade, it is possible to lose more than the amount of money ini ally deposited for a futures posi on. Therefore, traders should only use funds that they can afford to lose without affec ng their lifestyle. And only a por on of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade.
Page 2
Sponsored by Vol. 14, No. 126 / June 28, 2016
USDA STOCKS IN COLD STORAGE REPORT COMMODITY
Stocks in All Warehouses 31-May-15
30-Apr-16
Percent Of 31-May-16
May-15
Apr-16
1,000 Pounds Frozen Pork Picnics, Bone-In Hams, Total Bone-in Boneless Bellies Loins, Total Bone-in Boneless Ribs Butts Trimmings Other Variety Meats Unclassified
10,867 158,882 63,780 95,102 64,805 39,360 14,488 24,872 89,290 20,177 50,740 98,086 45,409 77,685
11,470 130,217 58,537 71,680 72,592 43,536 14,451 29,085 138,117 19,172 40,991 82,891 49,429 48,905
9,908 144,415 70,728 73,687 77,683 37,290 11,673 25,617 109,999 16,335 40,799 79,992 48,278 48,016
91 91 111 77 120 95 81 103 123 81 80 82 106 62
86 111 121 103 107 86 81 88 80 85 100 97 98 98
Total
655,301
637,320
612,715
94
96
Frozen Beef Boneless Beef Cuts
435,436 39,171
418,092 35,007
410,435 36,273
94 93
98 104
Total
474,607
453,099
446,708
94
99
Other Veal Lamb & Mutton
4,676 38,360
6,191 39,787
6,483 44,816
139 117
105 113
Total
43,036
45,978
51,299
119
112
1,172,944
1,136,397
1,110,722
95
98
Chicken Broilers, Fryers, Roasters Breasts and Breast Meat Leg Quarters Wings Other Chicken
17,116 146,329 166,213 44,175 365,556
23,204 187,316 110,991 78,826 404,617
20,203 182,653 113,947 82,046 404,377
118 125 69 186 111
87 98 103 104 100
Total
739,389
804,954
803,226
109
100
Turkey Whole Turkeys Turkey Breast Other
252,696 54,981 133,711
182,080 70,058 146,581
216,397 80,342 158,423
86 146 118
119 115 108
Total
441,388
398,719
455,162
103
114
6,743
10,412
8,605
128
83
1,187,520
1,214,085
1,266,993
107
104
Total Red Meat
Ducks Total Poultry
The Daily Livestock Report is made possible with support from readers like you. If you enjoy reading this report and would like to sustain it going forward, consider becoming a contributor by going to our website: www.DailyLivestockReport.com
Thank you for your support!
