US Perspective–31.05.11
31/05/2011
Courtesy of www.thejacobsen.com
Overall, hide prices last week did not move much with most business done at steady prices. There were a few exceptions where some selections traded down a dollar, but the week ended with somewhat of a stalemate—spreads quite large between buyers’ bids and suppliers’ offerings. According to a number of industry participants, sales volume was down with cow hides outperforming steer hides. Several suppliers indicated they had few or no steer hides to sell, but could have sold if they had.
A modest number of trades were reported at the end of the week with most prices mixed and falling within the week’s ranges. Packer BBS sold for $85, HTS from $85.50 to $86, and HBH for $75. One producer reported seeing a pick-up in business late in the week.
Slaughter for last week is estimated to be 672,000, up from the previous week’s US Department of Agriculture estimated kill of 654,000. Actual slaughter for the same period last year was 676,061. Earlier in the week, the Urner Barry poll of industry participants guesstimated the week’s kill to be 659,000.
Combined wet blue and hide export sales for week ending May 19 were 617,700 with shipments of 593,300. Through week 20, the average weekly total sales were 582,198 and shipments were 597,370 pieces. Average sales over the past ten weeks, including the May 5 record-breaking 941,000 total sales number, were 568,140. This is under the year’s trend by 14,058 hides per week or 281,000 for the year. The week on the whole was unremarkable; however, clearly a week’s worth of hides was sold which supports suppliers’ firmer stance this week.
Wet blue sales last week fell below the year’s trend with 95,800 pieces compared to the year-to-date average of 131,057. Wet blue sales this year are trending close to last year with 129,585. Below is week 20 year-to-date comparison of wet blue and hide sales, shipments with cattle slaughter.
The figures for slaughter, sales and shipments for 2009 were 12,559,131; 13,628,300 and 12,401,000 respectively. For 2010, they were 12,834,627; 11,271,095 and 11,644,400. The corresponding numbers for 2011 are 12,813,741; 11,643,967 and 11,947,400.
There were a number of reasons for a stand-off in the hide market last week. For one, this spring’s seasonally lower slaughter is helping producers maintain favourable forward positions, thus they are not in a hurry to sell. This may change if lower live cattle prices return packer margins into positive territory, but for the moment, retail sales and negative margins have not warranted increased kills.
On the demand side of the market equation, tanners appear unwilling to pay higher prices as they move into their traditionally slow season. When you consider tanners were not able to increase leather prices to offset previous hide price increases, it is difficult to imagine anyone willing to speculate on future markets beyond their immediate commitments.
According to Drovers/The CattleNetwork, packer margins for the week ending May 21 were $20.83, improving more than $47 per head for the week. Last week was the first time in five weeks that packers turned a profit.
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