Below we will expand a bit more on the cold storage report and some of its implications.

We do not mean to sound tone deaf with regard to what is happening in the broader macro markets, they are critical and we plan to review but frankly it is a bit silly for us to engage in another round of what ifs. There is plenty of pundits on 24 hour cable shows doing just that.

At this point we want to get a bit more perspective with regard to two things that are acutely important for livestock producers.

First, what happens with the value of the US currency (a lot of guessing here about the path of future interest rates and risk-off trades). Second, what happens with global growth and how that impacts meat demand. More on both in our reports later this week.

Cold Storage Stocks Situation: Total meat protein supplies in cold storage continued to increase in May but the increase was in line with the normal build in stocks for this time of year.

Total beef, pork and poultry supplies in cold storage were 2.318 billion pounds, 1 per cent higher than the previous month. The five year average m/m build is about 1.6 per cent.

Current cold storage stocks of all proteins are just 0.3 per cent higher than a year ago but 4.1 per cent higher than the five year average.

Beef in cold storage was estimated at 446.7 million pounds, 5.9 per cent lower than a year ago. Seasonally beef stocks decline at this time of year and so far the drawdown is in line with the long run trend.

As a result we see the results of the survey as neutral for the beef market in the short term.

Total pork inventories at the end of May were 612.7 million pounds, 6.5 per cent lower than a year ago and 0.4 per cent lower than the five year average.

It is positive for pork demand we think that pork stocks declined 3.9 per cent from the previous month even as pork production remains above year ago levels.

The rate of stock drawdown was in line with normal levels for this time of year, hence our assessment of the current report as neutral for the pork market. Ham inventories are down 9.1 per cent from a year ago, which should help support prices in the next three months. Still, we would not read more than that in the report.

Part of the reason why end users are not anxious to build inventories for the holiday season is because pork supplies should be more than adequate this year. Pork belly stocks in May were 77.7 million pounds, 19.9 per cent higher than a year ago and 18.3 per cent higher than the five year average. This was by far the most bearish number for pork.

The increase coincides with relatively weak prices for bellies during May. It appears that packers were willing to put some product away in order to support the market.

This may be a good strategy if summer demand materialises but the supply increase also may help keep belly prices in check and we see it as negative for the pork complex in July and particularly August.

Without robust belly prices in July and August it will be difficult to hit the rather lofty prices that futures have been pricing to this point.

Chicken inventories remain burdensome. Total chicken supplies at the end of May were 803.2 million pounds, 8.6 per cent higher than a year ago and 19.1 per cent higher than the five year average.

Breast meat inventories were 182.6 million pounds, 24.8 per cent higher than a year ago and 43.2 per cent higher than the five year average.

The supply of broiler wings also is burdensome. Total cold storage stocks of wings were estimated at 82.0 million pounds, 85.7 per cent higher than a year ago and 33.7 per cent higher than the five year average.

Turkey breast inventories are building fast as producers resist selling in the currently very depressed market. This may work in the short term but it also tends to temper the normal seasonal increase that we normally see in the fall.