CHICAGO May 22 The amount of pork in U.S. cold
storage warehouses in April dropped 17 percent from a year ago,
according to the U.S. Department of Agriculture's monthly cold
storage report on Thursday.
Analysts in part attributed the withdrawal to processors and
retailers pulling product from warehouses to augment a shortage
of available fresh pork pegged to the deadly Porcine Epidemic
Diarrhea virus (PEDv).
They also point out last month's pork stock's result
appeared smaller when compared to the record-high April 2013
Thursday's USDA report showed April total pork inventories
at 584.1 million lbs, up 8.6 million from March but down 116.9
million from April last year.
Pork inventories typically build from March to April as
processors and retailers stock up in preparation for late-spring
and summer demand for backyard cookouts, said analysts.
Still, the increase came as a surprise given the 4 percent
drop in hog slaughter so far this year, while pork output
slipped only 1 percent.
In April, packers relied on heavier hogs to help soften the
blow from PEDv that claimed an estimated 7 million pigs since it
was first detected in the United States a year ago.
"Even with higher weights hogs to offset the loss of
production from the virus, we still had a net drop in pork
production at that time," said Illinois-based Allendale Inc.
chief strategist Rich Nelson.
Bob Brown, an independent market analyst in Edmond,
Oklahoma, was also caught off guard by the month-over-month rise
in pork stocks. He anticipated a drawdown based on record-high
pork costs, particularly for bellies and trimmings, that were
not conducive for storage.
"All the pork prices came down during the month, but
remained historically high," said Brown.
Last month's pork stocks declined from a year ago because
the huge run up in pork prices gave end-users the opportunity to
take product out of freezers, he said.
Nelson and Brown agreed that the April storage increase from
the month before may have bearish implications for Chicago
Mercantile Exchange hog futures.
Those hog contracts on Thursday had fallen hard in response
to lower prices for market-ready hogs and pork at wholesale.
CME hogs for June delivery closed 2.325 cents per lb
lower at 117.600 cents.
(Editing by Grant McCool)