Lower cold storage levels yield higher meat prices

The cold storage reports from the U.S. Department of Agriculture (USDA) and the weekly commodity report from Stephens Inc., indicate chicken, beef and eggs are seeing lower cold storage levels compared to a year ago. Supplies of turkey and pork have increased year-over-year as of May 31.

Stephens notes 834.3 million pounds of chicken are sitting in cold storage, down 4.7% from a year ago. As cold storage levels rise, the price of commodities tends to move lower. The opposite is also true as chicken wings have seen prices rise 38.9% from a year ago. Wholesale chicken legs prices are also higher up 24.2% year over year. Wings and leg quarters have seen their cold storage levels drop 25.6% and 42.4%, respectively, from a year ago. Chicken breast prices are flat compared to a year ago with just a 7.2% dip in cold storage levels during that period.

Beef supplies in cold storage totaled 403.6 million pounds as of May 31, down 13.1% year over year. Choice retail beef prices were pushing the five-year high at roughly $6.20 a pound to start the summer, according to the Stephens report.

Beef prices are being supported as cattle slaughter numbers are trending below a year ago heading into the summer as is total beef production. Beef packers averaged $290 per head slaughtered In June, according to HedgersEdge.com data.

Rising corn and soybean costs expected due to late planting and wet spring and summer and this could squeeze margins for chicken and beef processing later this year.

Pork and turkey stocks are higher in cold storage this year. Turkey stocks are up 4.9%, with most of the increase in whole bird Toms. Bucking the trend, whole bird turkey prices are 10.3% higher than a year ago and wholesale turkey thighs are trading 25.9% year over year, according to the Stephens report.

Pork bellies are trading down 32.2% from a year ago. Pork stocks in cold storage totaled 628.7 million pounds up 0.8% from a year ago. The bulk of the increase is in hams up 23.7%, while picnics are down 24% and there are 13.1% fewer ribs in cold storage. Pork bellies in cold storage are up 4.9% from a year ago.

The spread of African Swine Flu is expected to benefit the U.S. meat industry toward the end of this year. Tyson Foods President and CEO Noel White said recently the U.S. chicken and pork sectors are those most likely to benefit from increased demand resulting from ASF in populated countries like China.