The Choice boxed beef cutout closed the week $10.15 lower ($210.20/cwt), while Selects declined by $7.05 (201.67/cwt). Price declines continued to slow as boxes return to the range in which they have traded historically over the past few years, lending confidence to buyers that further price declines could be limited. Looking into next week, buyers see value in many cuts after the precipitous decline the last few weeks. In addition, some retailers are looking to feature beef again to draw in shoppers. This is supportive and should help keep the price declines to a minimum. As for the rest of summer, a seasonal weaker demand accompanied by backlogged supplies should create downward force on prices.
(USDA) Cold Storage:
Total red meat supplies in freezers were down 18 percent from the previous month and down 13 percent from last year. Total pounds of beef in freezers were down 13 percent from the previous month but up 2 percent from last year. Boneless beef was 4% higher y/y and cuts decreased 15% y/y. Both beef categories had large month over month declines of over 10%. Total red meat was 1.2 billion pounds.
Frozen pork supplies were down 24 percent from the previous month and down 26 percent from last year. Stocks of pork bellies were down 27 percent from last month and down 8 percent from last year. Stocks of pork overall decreased dramatically compared to last month and are 74% below a year ago. Every category tracked in the pork complex showed year over year declines except bone-in picnics, still up 38% over last year. Hams, loins, spare-ribs, and variety meats all showed inventories smaller than 75% of a year ago. Large changes month over month were also noted. Only bone-in hams increased from April in the pork complex. U.S. inventories of frozen pork dropped by more than ever last month as outbreaks of the new coronavirus among meatpacking workers slowed production and pushed up prices, the federal government and analysts said on Monday. The decline shows that meat stocks remained tight after companies like Tyson Foods Inc and WH Group’s Smithfield Foods reopened slaughterhouses they had closed in April and May to contain the spread of the highly contagious disease. Analysts expect production to increase as meat processors slaughter pigs and cattle that backed up on farms and in feedlots while plants were closed.
Total frozen poultry supplies on May 31, 2020 were down 5 percent from the previous month and down 4 percent from a year ago. Total stocks of chicken were down 8 percent from the previous month but up 3 percent from last year.
USDA Hogs & Pigs Report:
United States inventory of all hogs and pigs on June 1, 2020 was 79.6 million head. This was up 5 percent from June 1, 2019, and up 3 percent from March 1, 2020. Breeding inventory, at 6.33 million head, was down 1 percent from last year, and down 1 percent from the previous quarter. Market hog inventory, at 73.3 million head, was up 6 percent from last year, and up 3 percent from last quarter. The March-May 2020 pig crop, at 34.9 million head, was up 1 percent from 2019. Sows farrowing during this period totaled 3.17 million head, up 1 percent from 2019. The sows farrowed during this quarter represented 50 percent of the breeding herd. The average pigs saved per litter was a record high of 11.01 for the March-May period, compared to 11.00 last year.
United States hog producers intend to have 3.12 million sows farrow during the June-August 2020 quarter, down 5 percent from the actual farrowings during the same period one year earlier, and down 2 percent from the same period two years earlier. Intended farrowings for September-November 2020, at 3.09 million sows, are down 5 percent from the same period one year earlier, and down 4 percent from the same period two years earlier. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 49 percent of the total United States hog inventory, up 2 percent from the previous year. The report was deemed bearish for both nearby futures and deferred contracts.
Comments: Due to the carryover built during plant closures this spring a record large front-end inventory of market hogs remains. Slaughtering at or above the current pace will progress in eroding the backlog, but it will take months to complete. On the other end of the carryover, for the first time in years, expect to be steadily lowering pork production.
May Egg Production Down 5 Percent:
United States egg production totaled 9.10 billion during May 2020, down 5 percent from last year. Production included 7.86 billion table eggs, and 1.24 billion hatching eggs, of which 1.15 billion were broiler-type and 85.6 million were eggtype. The average number of layers during May 2020 totaled 386 million, down 4 percent from last year. May egg production per 100 layers was 2,357 eggs, down 2 percent from May 2019. Total layers in the United States on June 1, 2020 totaled 384 million, down 3 percent from last year. The 384 million layers consisted of 320 million layers producing table or market type eggs, 60.9 million layers producing broiler-type hatching eggs, and 3.16 million layers producing egg-type hatching eggs. Rate of lay per day on June 1, 2020, averaged 75.6 eggs per 100 layers, down 3 percent from June 1, 2019.