US perspective - 08.06.2010
The Jacobsen Commentary and Market Opinion – 08.06.10
Courtesy of www.thejacobsen.com
There was no market report on Friday, June 4, or on Monday, May 31. There was mixed sentiment regarding the current status of exactly where the market was on Thursday—which was reflected in the array of prices reported. The steer heifer market closed on Wednesday on the Jacobsen Hide Index down nearly $2 from a week earlier at $66.14 and bounced back $1.41 on Thursday to $67.55. A number of people were of the mind that steer prices would hold while cows would continue to drop. On the other hand, there were some cow defenders who believe prices have fallen as far as they will go but that steer prices may drop further.
On Thursday a very large number of sales was reported with steer prices showing some resilience. We saw new highs for the week on HNS at $73 and $72 on the upper end of their spreads. HTS and BS also reflected bumps on the high ends of their medium-weight ranges at $71 and $70. It’s rare to get the same opinion from buyers and sellers but Thursday may have been the exception when both a buyer and seller reflected that it appeared that there were a few buyers out there who were getting nervous and did not want to miss the bottom. All in all, trading was mixed with some people still bullish while a few remained bearish.
The market on Wednesday continued to be under price pressure with a fair amount of activity. Tuesday was a holiday for Korea, keeping a major group out of the market for the day. A couple of people noted that bid responses were slow but prices were about steady. Another commented that the volume of business was a good sign and hopefully may help form a footing for prices. Several pundits placed the export steer market price on Wednesday at around $76 C&F for packer hides. A large number of sales was reported on Wednesday with prices mixed but reflecting the market pressure. Steer hides made up the majority of reports on Wednesday.
Wednesday’s USDA daily livestock slaughter under federal inspection was estimated at 130,000, the same as for the same period the previous week and just a couple of thousand under the same period last year. Due to the shortened week in observance of Memorial Day on Monday May 31, the week’s total slaughter was expected to be down from the previous week’s federally inspected slaughter estimates of 674,000.
The market was slow on Tuesday; not unusual considering it followed a long holiday weekend. Few packers had made offers and most had not been expected out until Wednesday. Several people noted they expected to see offer prices steady and that, if there were to be any adjustments, they would be later in the week.
Although prices were down the previous week, a few suppliers reported they sold good volumes while others seemed to do less business. Prices at $75 to $76 C&F for HTS appeared to be at a level where a large number of buyers were interested in buying, but these levels were not acceptable to sellers. This has been creating a standoff in the market.
Only a limited number of sales was reported at mixed prices on Tuesday. Heavy native steers sold for a low of $68 for processor hides and a high of $72 for packer hides. Branded cows were steady at $37. Butts were down in both weights, with prices ranging from $66.50 to $68.
Reports from the Guangzhou Leather Fair (June 1-3) indicated that the show was busy but that prices were low. While the fair is much smaller than others, such as the Asia Pacific Leather Fair (APLF) in Shanghai, it is situated in a very accessible location for many southern Chinese tanners to attend. Typically, only a small number of US suppliers attend each year. Feedback from sources noted buyers were mostly holding back with a few making bids; and bids were steady to a little down. One source on Tuesday noted that price expectations from tanners were aggressively low.
