Beef in cold storage fell another 21 million pounds in April, down from 451 million in March, according to the Livestock Marketing Information Center (LMIC). This, the group said, is the lowest cold storage number since June of 2017.
“Seasonally, beef in cold storage typically declines in the first 5 months of the year and remains there through the summer quarter before inventories build again in September through the end of the year,” LMIC said, adding that another decline in May might take inventories back to the lowest levels since 2014.
These smaller levels in cold storage point to several positive signs for the beef industry, LMIC noted.
“As supply continues to climb, demand appears to be working through those higher slaughter numbers as well as eroding relatively high cold storage figures that built up last year.”
Beef exports in 2018 saw record high levels, but LMIC said there was still enough beef on the market to enlarge cold storage inventory.
“The opposite has been true this year. Cold storage inventories have been falling more aggressively and first quarter exports of muscle cuts saw a pullback in interest from international buyers (down 5%).”
But, LMIC explained that cold storage supplies tend to be mostly boneless products (over 92% in April), while cuts of beef represented a much smaller proportion.
“Beef cuts in cold storage climbed month-over-month in April, while boneless beef declined 26 million pounds. We believe this points to greater consumption in the domestic market. Grilling season has begun, albeit slowly, and a healthy economy provides strong incentives for beef demand to be robust.”
The boxed beef cutout was elevated for the first 5 months of the year but has since started to fall, LMIC noted. “The cold storage report remains a rearview mirror type of report, and the cutout may be a leading indicator of demand weakness later in the year.”
Still, tightening cold storage stocks will put beef supplies in a better place to ride out the balance of this year, the group said.