US perspective - 01.06.2010
The Jacobsen Commentary and Market Opinion – 01.06.10
Courtesy of www.thejacobsen.com
There was no Jacobsen report from Monday to Wednesday (May 24-26). In the market on Thursday, several suppliers noted that business was better than the previous week, but overall prices continued to be under pressure, down a dollar from the prior week’s levels. A couple of people commented that good volume business on packer steer hides could be conducted between $75 and $76 C&F Asia port, but they were not prepared to sell at those prices.
While steer hides maintained a level of order, cow hides were under much more stress and were much more difficult to move. Meanwhile, buyers were trying to push the market down further with some holding out in the belief that prices would be lower this week. One trader characterised the market this way on Thursday: “It’s not terrible, or the nightmare scenario some are trying to portray, but it will not hold exactly where it is as others maintain!”
The market on Friday was on the quiet side with a modest number of sales reported. Trades were mixed and mostly within the week??s trading ranges. The exceptions were south-western and native cows, both off a dollar from their lows.
A number of people were out of the office on Friday afternoon beginning their Memorial Day holiday early, playing a part in the day’s subdued tenor. This week’s kills are expected to be reduced. A couple of pundits remarked that hide offers would be pushed back to Wednesday. They feel that this, along with lower kills, may strengthen the hide market. However, others are forecasting that it will be a little bit lower.
Expectations from some large tanners in China were that the market will be lower this week causing some buyers to take a wait-and-see approach. Some suppliers contend that those people may ultimately “miss the boat” and have to pay up money.
More pressure on prices
Last week, prices remained under pressure in the hide market for most, if not all, selections. Steer hides appeared to have some semblance of stability while cow and bull hides were very difficult to move. The market for the week was down for steer hides around $1.50 with the Jacobsen Hide Index (JHI) down $1.68 for the week through Thursday. Some of the cow selections such as HNDC continued to have a bumpy ride with wide daily swings. Plump cows and bulls reflected low market support and were off Thursday $2.75 on average from a week ago.
There were a fairly large number of bids, albeit at lower prices, but several suppliers noted that business was better last week than during the previous week and that support was broader. The USDA report for the week ending May 20 showed export sales and shipments for hides and wet blue were 552,900 and 570,000, both under the week’s slaughter of 681,000. Slaughter for the week is estimated to be 671,000, down 10,000 from the previous week and up 40,000 from the same period last year.
For the week ending May 20, USDA combined whole hide and blue sales were 552,900 compared to the previous week’s 570,000. Shipments last week were 537,000 compared to the previous week’s 674,000. The previous week’s lower sales and shipment numbers reflect the week’s soft market tone with prices falling $1-$2 on most hide selections. On a year-to-date basis this year through week 20, total slaughter amounts to 12,759,000, up from last year’s same period by 431,000 or nearly 3.5%. Meanwhile, both export sales and shipments continue to trend behind this year.
