US Perspective 19.04.11
The Jacobsen Commentary and Market Opinion
Courtesy of www.thejacobsen.com
This week’s hide market was transitional as some producers decided to accept lower prices in order to move hides. Following six weeks of export sales lower than the yearly averages, it became a priority to sell a week’s worth of business. The tone of the market was softer although there were still a number of suppliers claiming favourable positions and unwilling to take down money. Early in the week’s trading, packer HTS sold as high as $88 and HBH $78.50; but by the end of the week, buyers were able to find packer BBS at $86, HTS at $87 and HBH at $76.50. The net results were mixed with trades for steer/heifers ranging from steady money to $1 to $2 down.
Slaughter this week is estimated to be 640,000. Last week’s slaughter was 631,000 and for the same period last year it was 643,141. Earlier in the week, a poll of industry participants by Urner Barry guesstimated this week’s kill to be 632,652.
The hide market this week appears to be taking a breather with buyers pushing back quite hard and finding modest concessions in some instances. Several selections have rolled back $1 or more, but for the most part, producers continue being resistant. In a number of cases, there is impasse with both buyers and sellers refusing to budge. Price aside, interest in general continues to be fairly widespread according to several producers.
A modest number of trades were reported today for both packer and processor hides. Most sales were priced within the week’s trading range, however, heifers traded down between $1 and $2 for natives and brands at $76.50 and $79 respectively. Northern bulls were down $1.50, selling for $69. On the up side, NHNDS sold for a dollar higher than last week.
Last week’s US export sales for week ending were 435,400 whole hides and wet blue sales. Through week 14, the average weekly combined sales are 568,376. Sales this year are ahead of the same period last year by 1.19% with the gap narrowing from 3.72% last week and 5% the week before.
Combined shipments for the week were 480,700, also below the year’s trend of 598,315. For comparison, slaughter last week was 631,000.
Wet blue sales last week were 79,500 with China the biggest destination receiving 35,200 full substance pieces. Year to date, average weekly wet blue sales are 125,642 compared to 137,425 for the same time last year. Current US wet bluing capacity is estimated at between 180,000 to 200,000 hides per week. Assuming a domestic consumption at 30,000 to 35,000 hides per week, a significant amount of unused blue capacity remains untapped.
The market continues to be under pressure with a number of offers out steady with last week as producers fight to hold prices. While a few buyers are fishing with bids down a couple dollars from last week other serious bids for HTS in the $94 to $94.50 ranges have been reported. Although the market appears softer, several producers note that the quantity of biding is fairly high, giving the impression that hides are needed.
The sentiment reflects a softer market with a standoff between buyers and sellers.
Last week, live cattle prices increased 1.3% to live weight $123.20 per hundredweight, and is now up 23.4% from a year ago at $99.81. Meanwhile, beef cutouts (meat prices) were up 1.8% at $191.36 per hundredweight for choice cutouts. Choice cutouts are up 16.8% from the same period last year. Hide and offal prices increased 2.8% last week to live weight $13.62 per hundredweight and are up 32.9% from a year ago.
