MEAT  IN  COLD  STORAGE

Last week USDA-NASS released the monthly cold storage report which reported frozen stocks of red meat above a year ago on December 31, 2011, driven by both larger beef and pork stocks. However, chicken supplies at the end of 2011 were significantly smaller due to ongoing contraction within that sector.

 

BEEF  &  PORK  PACKER  MARGINS

Margins for beef and pork packers have eroded in recent weeks and are well below a year ago.  Of course calculated margins do not include all the other costs (labor, transportation, deprecation, etc.) that must be covered in order to make a profit. Still, it is clear that in recent weeks, shrinking beef packer margins have translated into unprecedented red ink in terms of profitability. LMIC’s estimated packer margins are the price spread or difference between what typical packers pay for an animal and the wholesale value of meat plus the estimated byproduct value (hide, variety meats, etc.). All those values are based on reports made available by USDA’s Agricultural Marketing Service. In 2012, tight packer margins will provide a significant headwind to fed cattle prices and to a lesser extent limit increases in slaughter barrow and gilt prices.