Pork supplies in U.S. freezers at the end of last month swelled nearly 14 percent over last year’s levels, according to a government report, a reflection of meatpackers’ stockpiling the meat to keep pace with robust exports. Beef supplies were up 11 percent.
Among dairy products, cheese inventories totaled 1.06 billion pounds at the end of August, down 1.9 percent from a month earlier and down 0.9 percent from a year earlier. Butter stockpiles totaled 165.6 million pounds, down 12 percent from the end of July but up 6.6 percent from a year earlier.
The storage numbers were neutral for cheese prices and largely neutral to bearish on butter supplies, FCStone analysts said in a report.
“Overall we anticipated and received seasonal declines of cheese, but those inventories did not drop by more than average draw-downs, so it nullifies the impact of the report,” FCStone said. “On balance, we feel that the price of CME spot cheese over the past 45 days or so is reflected in this report.”
As of Aug. 31, pork supplies nationwide totaled 440.7 million pounds, compared with 388.3 million pounds on the same date in 2010, the U.S. Department of Agriculture said Sept. 23 in its monthly Cold Storage report: http://bit.ly/nq0Vch. Higher loin supplies, which jumped 46 percent, accounted for much of the increase in total pork stocks.
U.S. pork exports are running at a record pace, fueled by a weak dollar and stepped-up purchases by China, which is trying to rein in surging food inflation. This year through July, China imported almost 201 million pounds of U.S. pork, a six-fold increase over the same period in 2010, according to USDA data.
While U.S. pork inventories are up over last year, “this largely reflects the need for larger staging stocks, given the mammoth increase in export business,” industry analysts Steve Meyer and Len Steiner said in CME Group’s Daily Livestock Report Sept. 23. There is “a strong relationship between export volume and the level of inventories required to service this business,” the analysts wrote.
Compared to the end of July, U.S. pork inventories declined 3 percent, according to the Cold Storage report. That’s triple the average decline for that period over the previous five years, “an indication that domestic and export demand remains in good shape,” Meyer and Steiner said.
For the first seven months of 2011, U.S. pork exports rose 16 percent, to 2.84 billion pounds, according to the USDA. At that pace, this year’s exports will surpass the full-year record of 4.65 billion pounds in 2008.
Beef supplies at the end of August totaled 429.2 million pounds, up from 387.4 million pounds on the same date a year earlier and up 3.4 percent from 415.2 million pounds a month earlier, the USDA said.
The increase reflects seasonal factors, as retailers and restaurants build supplies in preparation for stronger demand over the year-end holidays, Meyer and Steiner said. While beef inventories should continue to increase into the fourth quarter, “current stocks are far from burdensome,” the analysts said.
U.S. chicken supplies at the end of August totaled 702.2 million pounds, down 0.5 percent from a month earlier and down 7.3 percent from a year earlier. The poultry industry’s recent production cuts “appear to be having an effect,” Meyer and Steiner said.