US Perspective–08.02.11
08/02/2011
Courtesy of www.thejacobsen.com
Although most people agree that last week was relatively quiet with most of the Asian customers out of the market on holiday for the Lunar New Year, there were enough buyers to push prices higher. Both cowhides and steer hides traded higher. The week’s average Jacobsen Hide Index was $76.98, up $1.05 from the previous week when it ended at $77.80. HTS sold for $81.50, BS at $81, and BBS at $80.
To put today’s hide market into perspective with other bull hide markets, in April 2001 the hide market was actually higher than today’s levels, making today’s prices near but not the highest on record. On April 12, 2001 for instance, HNS sold for $86.50, BBS for $83.50, and HTS for $83. However, by the end of July/early August that year, prices had fallen with HNS at $62.50, BBS at $50.50, and HTS at $52. This precipitous drop after the last record prices may be the reason some producers are becoming nervous with today’s talk of new record prices.
The USDA estimate for week-ending slaughter is estimated to be 624,000, down considerably from last week’s 650,000 due to the massive winter storms. Earlier in the week, participants in the Urner Barry poll guesstimated average slaughter to be 641,200.
In spite of record high prices, for week ending January 27 both sales and shipments of cattle hides and wet blue exceeded the week’s slaughter numbers. Combined hide and wet blue sales were 706,800 and shipments were 684,700. Meanwhile, slaughter for the period was 650,000.
There were cancellations or adjustments for the whole hide sales numbers amounting to 48,769 pieces. The primary areas for corrections were China at 28,745, followed by Korea at 6,395 and Mexico at 3,516.
Following is the three-years-to-date comparison for slaughter, sales and shipments of whole hides and wet blue. At a glance, this year shows significantly greater sales and shipments to the previous two years. Sales this year are ahead are of 2009 by 18.9% and 2010 by 27% while shipments outpace 2009 by 15.4% and 2010 by 11.2%.
Through week 4, for 2009, slaughter, sales and shipments were 2,500,903; 2,256,000 and 2,110,600. For 2010, the corresponding figures were 2,603,309; 2,108,900 and 2,189,900. The figures for 2011 are 2,550,932; 2,680,764 and 2,435,300.
According to the Sterling Beef Profit Tracker in Dovers-The Cattle Network, packer margins improved a tad over $30 per head for the week ending January 31 coming in at $58.73. These positive margins will likely keep kills at or above seasonal norms.
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