US Perspective–12.04.11
14/04/2011
Courtesy of www.thejacobsen.com
The US hide market this week exhibited some restraint with light trading and prices struggling to hold steady. Sources report there was a broad level of interest from many or most hide buying regions. Much of the bids, however, were down as buyers fished for bargains. Up to Friday, most sales reported were at steady prices.
Friday’s reported trades picked up with a greater proportion of processor sales reported. Prices ranged from steady to down with the lower prices influenced by the large number of processor sales. HNS and BBS topped at $89 and $88. Several processor cow selections were down a couple dollars from the week’s average.
All eyes seemed to be on the threatened government shutdown as the US Congress and executive tried to work out differences in the 2011 budget. As it relates to the hide and leather industry, the fruition of a government shutdown would have affected non-essential functions. According to sources at the US Department of Agriculture (USDA), the Secretary of Agriculture has indicated that there would be federal inspectors at packing plants. This would allow US slaughter to continue. Other functions such as reporting and reports have not been determined, but there is a high probability that they would have been closed. In the end, the government did not shut down.
USDA reported estimated slaughter for the week at 631,000. Last week’s slaughter was 640,000 and for the same period last year it was 619,346. Earlier in the week, industry participants in the Urner Barry poll estimated slaughter this week to be 630,278.
Production numbers for the corn, soybean and wheat crops of 2010-11 were left unchanged in last week’s USDA Supply-Demand reports. (Corn was at 12.447 billion bushels, soybeans at 3.329 billion bushels, and wheat at 2.208 billion bushels.)
The corn carry-out number was left unchanged from last month at 675 million bushels. The trade was generally looking for a reduction of 80 million to 595 million bushels.
Use for Ethanol was increased by 50 million to 5 billion bushels, while feed use was reduced by 50 million to 5.15 billion bushels.
The soybean carry-out number was also left unchanged from last month at 140 million bushels. This was accomplished by reducing exports by 10 million bushels to 1.59 billion bushels and reducing the crush by 5 million to 1.65 billion bushels while the seed/other category was raised by 15 million to 125 million bushels.
The wheat carry-out number was reduced by 4 million to 839 million bushels from 843 million last month. The reduction was accomplished by a 4 million bushels increase in the seed/other use category to 80 million from the 76 million bushels reported last month.
Buyers on the hide market continued to express interest with a leaning toward more cowhides than steer hides and a desire for lower prices.
Export sales for week ending March 31 were slightly under the year’s trend with 570,000 whole hides and wet blue sales. Through week 13, the average weekly combined sales are 578,604. This is the fifth consecutive week that export sales are below the year’s weekly averages. Sales this year are ahead of last year the same time by 3.72% with the gap narrowing from 5% last week.
Combined shipments for the week were 712,700, above the year’s trend of 598,591. For comparison, slaughter last week was 640,000 with shipments considerably above and sales below.
Wet Blue sales last week were 138,500 with China the biggest destination receiving 50,200 full substance pieces. Year to date, average weekly wet blue sales are 125,642 compared to 137,425 for the same time last year. The three-year comparison of slaughter, wet blue and hide sales and shipments is as follows.
Slaughter, sales and shipments through week 13 in 2009 were: 8,018,590; 8,017,800 and 7,478,500. In 2010, the figures were: 8,225,278; 7,251,995 and 7,428,700. For 2011, they were: 8,307,511; 7,521,864 and 7,895,700.
With the ongoing crisis in Japan, the impact on US auto manufacturing is beginning to be a factor. This past week, for instance, Toyota announced it was likely to have to shut down its North American factories for some period later this month. In the auto leather sector, sources note there will likely be some corresponding soak reductions.
As people began drifting back and settling in from the APLF exhibition in Hong Kong, a number of people noted a small shift in the hide market. The conventional thinking is that the US hide market has run out of a little bit of steam as buyers increasingly held back with each incremental price increases. US export sales trending under the year’s weekly average supports the notion.
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