Source:  Rita Jane Gabbett, MEATNGPLACE.COM,  11/23/09

USDA on Friday reported lower meat and poultry stocks in cold storage during October, which a Wall Street analyst called good news for meat processors.

Also on Friday, USDA reported more cattle placed on feed in October than a year ago, but the increase was less than analysts expected, which was seen as bullish for cattle prices.

Cold Storage

Chicken in cold storage in October declined by 19.8 percent, while turkey fell 11.6 percent, beef fell 9.5 percent and pork fell 1.5 percent compared to a year ago.

J.P. Morgan analyst Ken Goldman noted the chicken and turkey declines were the largest year on year since June 2007 while the drop in beef in storage was the largest since December 2005 and the pork decline was the first since April 2009 before the impact of the H1N1 virus.

"All else equal, this is an incremental positive for meat processors," wrote Goldman in a note to investors.


Cattle on Feed

Cattle placed on feed rose 1.5 percent in October from a year ago, a smaller increase than the consensus estimate of 2.6 percent, according analysts polled by Dow Jones. Smaller than expected placements imply lower fed cattle supplies in March and April, according to the CME Group's Daily Livestock Report.

The report also noted cattle placed on feed in October averaged 687.4 pounds. While lower than the 716-pound average in August and September that is still 10 pounds heavier than cattle placed in October 2008.

"The relatively high weight of the cattle going into feedlots suggests continued high slaughter weights next spring, potentially offsetting some of the bullish sentiment of lower-than-expected placements," according to the Daily Livestock Report.

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