US Perspective - 26.04.11
The Jacobsen Commentary and Market Opinion
Courtesy of www.thejacobsen.com
The hide market last week showed weakness with prices giving back from their historic levels. Last Friday, the Jacobsen Hide Index (JHI) was $84.93, down a dollar from a week ago. The weekly JHI average at $85.39 was off $0.74 or .86% from the previous week. The index price is currently 23% ahead for the year.
Along with the JHI, live cattle, beef cutout, and grain prices also fell last week. Live fed steer prices were $119.23 per hundredweight, down 3.2% and beef cutout value was $118 per hundredweight, down 1.23%. Meanwhile, Omaha corn at $7.26 and Iowa soybeans at $13.27 per bushel were down 2.42% and 2.35% respectively. The USDA reported last week's hide offal price at $13.72 per hundredweight which was down .81% from the previous week – this is remarkably close to the JHI .86% weekly price decline!
There were a fairly large number of sales reported with mixed prices. Several packer trades were back up to last week's highest prices including HTS for $88, BS for $87, HBH for $78.50, and NHNDC for $73. The remainder of sales fell in with last week's ending price range. HNS sold up $1 from last week at $80.
On the supply side, a few offers have been tendered with prices similar to those seen last week. People have mixed expectations with prices this week, varying from “holding steady” to “seeing prices possibly fall off a dollar.”
Industry participants in the Urner Barry poll believe slaughter may be reduced this week due to the Good Friday holiday. The average guesstimate places this week’s slaughter at 626,706. The Good Friday holiday in 2010 fell on April 2nd and for that week kills were 631,000. Last week’s estimated kill was 640,000.
Five weeks after the tsunami, Japanese automakers continue to struggle because of lack of parts. Toyota announced yesterday that it had resumed car production at all its Japanese plants, but are only running at half capacity because of lack of parts. Sources note that auto leather manufactures are also being impacted by the part shortages, cutting soak while auto productions remains below normal.
The US market was shortened this week with the observance of Good Friday bringing most trading to a conclusion by Thursday. The holiday is also affecting slaughter with kills estimated to be down at around 626,000. Last week’s slaughter was 641,000.
In spite of the shortened week, the market has been fairly quiet as it faces downward pressure from buyers. Some bids with prices around $90 for HTS C&F China have been made, implying that there are people in need of hides but desiring to push prices back. Sales both reported and not reported are suggesting a market being tested, with prices ranging from firm to lower.
According to the Drovers/CattleNetwork, packer margins dropped $20 into negative terrain for the first time in a month. The Sterling Beef Profit Tracker for the week ending April 16 estimates average packer margins at -$15.77.
Last week’s US export sales for week ending April 14th were 531,100 whole hides and wet blue sales. Through week 15, the average weekly combined sales are 568,891. This is the seventh consecutive week that export sales are below the year’s weekly averages and slaughter. Sales this year are barely ahead of last year at the same time by .4% with the gap narrowing from 1.19:% last week, 3.72% the previous week, and 5% two weeks prior.
Combined shipments for the week were 519,900 – also below the year’s trend of 593,087. For comparison, slaughter last week was 640,000 and the year-to-date weekly average is 638,606.
Wet Blue sales last week were 89,000 with China the biggest destination receiving 24,000, followed by Italy with 21,500 pieces. Year to date, average weekly wet blue sales are 120,123 compared to 135,953 the same time last year.
