US Perspective—06.07.10
06/07/2010
Courtesy of www.thejacobsen.com
Last week quietly wound down with a number of people out of the office early to get a jump on the long July 4 Independence Day holiday weekend. Trading activity was consequently off with no trades reported on Friday. Several people commented that they did very little business last week following the previous week’s robust sales. This coming week kills will be reduced by one day by the holiday observed on Monday, but several packers indicated that the following Saturday they will have a full day’s slaughter.
The week wrapped with estimated slaughter at 664,000, down 3,000 from the same period the previous week and up 37,000 from the same period last year. Industry respondents to the Urner Barry poll taken earlier in the week estimated kills for the week to be 662,571.
Prices this week held on steer hides and fell a dollar or two on a number of cow selections. Following the largest weekly wet blue and hide sales numbers for the year of 873,000, there was a bit of a stand-off between suppliers and tanners, which limited business. The stand-off is between buyers who do not wish to participate at higher levels and suppliers who feel the same about lower prices.
HTS, BS, and BBS prices on the premium side were $73 to $74. HNS sold for up to $75 and CBS $67.
Leather business for shoe uppers continues to be good, which is helping hold steer prices. Furniture upholstery leather, due to reduced demand in the housing sectors, is continuing to keep pressure on cows. A few suppliers, however, reported that they have been seeing an up-tick in interest for cowhides.
January through May live weight of federally inspected slaughter was down 1.7% or 22 pounds from the same period last year. This corresponds to an increase in cow and heifer slaughter for the period of 116,000 and 62,000 respectively. Cattle feeding and packer margins improved last week. Feedlot margins last week averaged $105.39 while packer margins nearly broke even at (-$0.83) according to the Sterling Beef Profit Tracker.
The US economic news continues to emphasise how vulnerable the recovery is. The Dow Jones Industrial Average ended June under 10,000, down 10% from three months ago. The recent events include lower forecasted auto sales, dismal housing, high levels of unemployment, ballooning national debt in the US as well as in Europe, and slowing growth in China.
US Department of Agriculture export sales for week ending June 24 showed sales up significantly from the previous week with 691,000 hides and 181,000 wet blue for a total of 873,000. Hide sales the previous week were 282,600 and wet blue were 181,000. This report had the second-largest hide sales number this year and the largest combined total. The next highest sales week for both hides and combined totals was week ending June 10, with 700,000 hides sold and 757,000 combined hides and wet blue. It is interesting that the two highest sales weeks were in June. This no doubt goes a long way in explaining the recent strength in the hide market, most specifically steer hides.
The most recent combined wet blue and hide shipments totalled 697,300, a solid number but not as impressive as the same week’s high sales. In 2010, year-to-date slaughter through week 25 is 16,051,157, which is 1,214,157 ahead of year-to-date shipments at 14,837,000. By the same week in 2008, slaughter was 16,301,000 and shipments were 16,078,600. Through week 25 last year, slaughter was 15,642,000 and shipments 16,195,300.
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