Frozen Beef Inventory Down Sharply From Year Ago

Frozen inventories of meat in cold storage at mid-year were lower than a year ago, except for turkey, according to the latest NASS Cold Storage report. Although frozen meat quantities were down from twelve months earlier, they were above expectations in most cases.

Chicken inventories, which constitute the largest amount of meat in freezers, increased by 23 million pounds during June, the biggest June increase in ten years. Half of the increase was accounted for by leg quarters and the other half came in the “other” category. Last year’s mid-year inventory was the highest ever for that time of the year; and this year’s frozen inventory is only 1% short of that.

Frozen beef inventories increased five million pounds during June, down 10% from a year earlier. The decline followed a 47 million pound decrease during May, which was the biggest frozen beef inventory decline for the month of May in at least ten years. Compared to the start of the year, frozen beef inventory is down 27%, also the biggest January-June decline in ten years.

The enigma of meat markets this year continues to be pork bellies, or bacon, as frozen inventories remain far below historical norms. Frozen belly holdings at mid-year were down 65% from a year ago. Three months earlier, frozen belly inventories were down 68% from a year earlier. Belly inventories are almost always liquidated during June, and the 9 million pound reduction in stocks was slightly less than the average outflow.

The 22 million pounds of bellies in cold storage at the end of June can be measured against an outflow of bellies from cold storage last July of 12 million pounds and the July 2015 outflow of 21 million pounds. USDA’s Agricultural Marketing Service is currently reporting wholesale belly trade values at $2.65 per lb. as the market tries to ration supplies. The lowest frozen belly inventory in modern times was 4.8 million pounds at the end of September 2010.

Frozen inventories of other products that come from hogs are not as scarce as bellies. Total pork in cold storage at mid-year was down 4% from a year earlier, or 24 million pounds. The decline in bellies, year-over-year is 40 million pounds. Frozen ham inventories are up 13 million pounds and hams in boneless form are up 22 million pounds. This may suggest that there are some product demand issues for further processed meats, based on the accumulation of boneless product.

A similar situation is occurring for turkey, where breast product inventory is up 21% from a year ago at the end of June. Frozen turkey inventory, in total, at mid-year was up 12% from a year ago. The increase is a consequence of a slow-down in turkey consumption during the spring quarter, with preliminary data suggesting a 2-3% decline compared to the second quarter of 2016.