Meat and poultry inventories in freezers are above year earlier, without exception. The biggest increase, in percentage terms, was lamb, with 19% more in storage than on May 31 of last year. In absolute volume terms, the biggest year-over-year increase was in chicken, based on a gain of 93 million pounds, year-over-year. Beef registered the next largest increase of 54 million pounds, of which boneless product represents over 90% of the increase. Pork inventories were up 33 million pounds with belly stocks accounting for two-thirds of that rise. Frozen turkey stocks posted the smallest year-over-year increase (5 million pounds) since November 2015, an indication that the turkey industry is making progress in aligning production with consumer demand.
During May, chicken inventories expanded by 10 million pounds. During the month of May, that was the biggest increase since 2014. In 2014, frozen chicken inventories were 25% less than they are now, and were at the lowest levels for the spring quarter in close to 20 years.
Wholesale breast meat prices this May averaged 10 cents lower than April, the biggest May price decline for breast meat in over 10 years. The decline in breast meat prices may have helped to limit the increase in frozen breast meat to 5 million pounds during May as additional usage may have been encouraged. Breast meat prices have continued to drift down in June, as have prices for most other broiler products, as the industry tries to encourage more usage to reduce freezer inventories. That could distract some consumers from the red meat area of the grocery store this summer.
Frozen beef inventories in May declined by 5 million pounds, even though they were considerably above a year earlier. Frozen beef inventories usually decline during May, and this year’s slippage compares to a 46 million pound drawdown in May 2017, a 6 million pound decline in May 2016 and a 10 million pound drop in 2015. Frozen boneless beef quantities dropped 8 million pounds while beef cut inventories increased 3 million pounds.
U.S. frozen beef inventories tend to track roughly with beef import and export volumes. The most recent monthly data on beef imports shows monthly year-over-year declines of about 15 million pounds, so the trend in boneless beef holding is consistent with beef import trends. U.S. cow and bull slaughter is up about 10% this quarter, with beef from this source primarily marketed as 90% lean products, and this could be limiting the pace at which frozen beef inventories are declining. During the second quarter of this year, the price spread between domestic and imported lean beef trimmings has continued a trend of increasing premiums for domestic product. That should discourage imports in upcoming months and lead frozen beef inventories to remain in a month-to-month downtrend, and eventually result in year-over-year declines.