US Perspective—19.01.10
19/01/2010
The Jacobsen Commentary and Market Opinion
Courtesy of www.thejacobsen.com
The market ended last week on a strong note following a week with progressive upward pressure culminating with prices increasing $1-$2. There were a moderate number of trades received with a new high for HNS of $66.50. Branded heifers were up $1.50 at $50.50 and HTS up $1.50 from the previous week with an average of $63.50. Several sources said that some buyers backed out of the market on Friday.
Slaughter for the week is estimated to be 652,000—considerably higher than expectations earlier in the week of 631,000. Kills over the same period last year were 641,000. Actual slaughter numbers of 530,270 for the week ending January 2 were reported today by the US Department of Agriculture (USDA). The kill that week consisted of 49.1% steers, 29.8% heifers, 8.2% dairy cows, 11.5% other cows, and 1.3% bulls.
The latest USDA export sales report does not give us a clear picture of the previous week’s sales since it does not include last Friday’s sales activity. Given that a lot of business was conducted on Friday, we will not see these results until Thursday of this coming week.
For week ending January 7, combined whole hide and wet blue sales totalled only 314,000, with hides at 284,700 and wet blue at 30,000. Both hides and wet blue had a number of downward adjustments that negatively affected these figures.
Whole hides had cancellations that equalled 36,578, primarily from Korea with an adjustment of -17,360; India, -6,775; and Hong Kong, –4320. Wet blue whole hides were left relatively unchanged but split grains had a significant negative change of -27,123, most notably in Hong Kong with 26,400.
Combined whole hides and wet blue export shipments last week were 571,000. While this was much closer to the week’s slaughter of 640,000, it is interesting that the wet blue shipment numbers were significantly greater than sales. For the week, blue shipments of 146,000 were nearly five times greater than the 30,000 of sales, which impacts inventories in a positive way.
The cow hide market appears to have led the way last week, showing more steam than the steer market. In the previous week cows sold well and have continued to be in demand. Some sales for HNC were reported between $50 to $52 C&F China and are expected to be higher with suppliers asking up money. While some offers for steers were also up from the previous week, they have been met with a number of lower bids.
To provide more insight to whole hide and wet blue export sales for week ending December 31, the following USDA report report details have been revised to include sales made during the last week in 2009 for shipments scheduled in 2010.
Net whole hide sales of 80,300 were for hides scheduled to ship that week and net sales scheduled for shipment in 2010 are 119,000. When hides scheduled for 2010 deliveries are included, the actual whole hide sales for the week total 199,300.
The same applies for wet blue sales, as sales scheduled for delivery in 2009 equalled 70,000 and for 2010 equalled 53,300. Total sales of wet blue for the last week of the year were 123,300. The combined total for weekly sales of whole hides and wet blue for the week ending December 31 equals 322,600. This number is still lower than the week’s slaughter of 526,000, but makes a lot more sense when you include sales for 2010 shipments.
The latest slaughter projections are down a little from the previous week’s 637,000, with some packers saying that they may reduce kills a little. According to commodity market news reporting service, Urner Barry, respondents to a poll conducted on January 11 are forecasting kills to be around 631,000.
Automakers showed their newest wares in Detroit’s auto show at the beginning of last week. They are hoping the auto show will help launch a resurge in the US auto industry following the 2009 retraction in sales of cars and light trucks from 21% to a shaky 10.4 million vehicles.
Meanwhile, as a direct contrast, China auto sales exceeded expectations in 2009 as they overtook the US with sales of passenger cars and light trucks of 12.7 million units. Total sales, including 900,000 bigger vehicles, are 13.6 million, which represents a 45% growth from 2008. Analysts expect auto sales to continue to grow—at albeit at a lesser rate in 2010—as long as China’s economy continues to recover and oil prices remain stable.
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