US - Last week was another volatile one in the livestock futures markets, that now sounds like a broken record, and USDA’s National Agricultural Statistics Service (NASS) released their monthly Cattle on Feed and Cold Storage reports on Friday; those reports will be quickly reviewed here, writes Steve Meyer and Len Steiner.
Compared to pre-report estimates, the Cattle on Feed report was a bit bearish in that December’s placements of animals into feedlots were larger than anticipated and head marketed below expectations. The on-feed inventory, though below a year ago as of January 1st, was larger than analysts calculated. The number of cattle in feedlots with 1000 head or more capacity was slightly below a year ago (down year-over-year by 53,000 head or 0.5 per cent.
Importantly, in December there were year-over-year increases in the number of cattle placed in the two heavyweight categories (700-to 8-799-pounds and 800-pounds and heavier). The number of animals entering feedlots weighing over 700-pounds was up 8.6 per cent from one year earlier while the head count declined 9.4 per cent for cattle weighing under 700-pounds. The industry continues to move away from placing lightweight beef-type calves into feedlots.
The recent report contained the quarterly breakdown of steers and heifers in feedlots. As of January 1st, the number of steers on-feed was 216,000 head above a year ago. In contrast, heifers in feedlots were significantly below a year ago (down 269,000 head) and the count was the smallest since NASS began the report in 1996. So, as is widely recognized, all indications point to more heifers and cows in breeding herds than a year ago. NASS will provide a detailed inventory snapshot on Friday (January 29th) in their annual Cattle report.
Turning to the monthly Cold Storage report by NASS, as of December 31st, the general trend in animal-based protein was for continued yearover-year increases in frozen tonnage. Beef in cold storage was 16 per cent above the year ago volume. The vast majority of beef in cold storage is boneless beef, which is also where most the increase occurred. However, the rate of increase in frozen beef tonnage has moderated since July. Although 8 per cent above December 2014, frozen pork stocks have posted significant reductions since last summer. Pork in cold storage is down 17 per cent since August of 2015, largely reflecting the uptick in pork exports that took place during the last few months of 2015. The volume of chicken in cold storage experienced a month-to-month decrease from November to December, slipping 2 per cent. However, frozen stocks of chicken remained well above a year ago, up 21 per cent compared to the end of December 2014. Frozen turkey had a seasonal increase in volume into December and was actually 3 per cent above 2014’s.
Looking at specific cuts in cold storage (for the animal proteins that have them – pork and chicken), there were mixed trends. As of December 31st, pork loins and sparerib volumes are up 22 per cent and 55 per cent, respectively, from 2014’s. Frozen belly stocks also increased year-over-year by 13 per cent.
Conversely, pork butts (down 24 per cent) and pork trimmings (down 16 per cent), and other pork (down 11 per cent) are the only products below year ago in volume. The only chicken item with stocks below year ago were paws and feet. Otherwise, the chicken items with the most significant increases in cold storage volume year-over-year were drumsticks (up 40 per cent), and thigh and thigh quarters (up 40 per cent); of course, those are major exported products.
You can view the full report by clicking here.
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