Cold Storage inventories of beef, pork, chicken and turkey at the end of August were 2.389 billion pounds, 0.3 per cent higher than a year ago and 8.8 per cent higher than the five-year average.

The inventory drawdown from the previous month was 1.4 per cent when normally we see a 0.4 per cent decline, a positive indicator for meat demand especially given the big increases in production across all species.

Lower chicken stocks were the primary reason for the larger than normal drawdown in stocks, as all chicken inventories at the end of August were 773.7 million pounds, down 6.1 per cent from the previous month and the biggest drawdown in chicken stocks since July of 2011.

Breast meat inventories continue to track about 12 per cent above last year and 29.6 per cent higher than the five-year average. However, stronger exports are helping clean up the inventory of dark meat, with stocks of leg quarters declining 8.8 per cent from the previous month in August and now 9.5 per cent lower than a year ago. As for beef and pork, we thought the picture was a bit mixed.

Boneless beef stocks normally decline in August and September but instead they are moving higher, in part because we think some cheap fat trim is going into the freezer. This will limit the upside for 50CL beef in October and November.

Pork inventories in August increased 1.4 per cent compared to an average pace of +2 per cent, a rather positive number. However, ham stocks increased at a faster pace and we see this as bearish for Q4.