US Perspective - 12.07.11
The Jacobsen Commentary and Market Opinion
Courtesy of www.thejacobsen.com
The US hide market began the shortened week’s business with one day’s less slaughter to contend with. Following a fairly quiet week last week, most people did not expect to see a huge number of hides traded this week but expected the market to hold fairly steady. Packers continued to remain in good forward sold positions and just enough buyers kept picking up hides to hold prices.
Several commodities saw price decreases last week including Omaha corn down 9.36% at $6.10 per bushel. Meanwhile, live cattle decreased $1.87 at $110.32 per hundredweight and choice cutouts were up 0.8% at $178.54 per hundredweight.
There have been a modest number of inquiries for a mixed array of hides leaning more towards the standard steer/heifer selections. A couple suppliers said they had a large number of bids for a wide assortment of material, albeit at lower prices. Sentiment in the marketplace is mixed with the majority predicting small volumes at steady prices this week.
Suppliers still maintain they have good forward-sold positions and with Monday’s holiday and subsequent reduced kill, there does not appear to be any huge a sense of urgency to sell. Conversely, buyers are not acting very anxious to pay asking prices although there apparently have been plenty of bids. Despite the standoff, there has been some trading at mostly steady levels.
Packer Margins
Packer margins continue to be in positive territory. According to the Sterling Beef Profit Tracker in Drovers/CattleNetwork, average packer margins for the week ending July 2 were $48.36 per head, down $4 per head from the previous week.
The week’s hide market activity was somewhat reduced with suppliers turning down a large number of bids too low for their comfort level. While some of bids came close to offers in the range of $94 to $95 C&F for HTS/BBS/HNS, a number of outliers tested the market with prices in the upper $80s. A few sales this week concluded as high as $86 to $86.50 FOB for HTS, BBS and HNS, which depending on source and destination, converts to $93 to $94.50 C&F.
A couple producers said they concluded decent business and a few said, “Business was tough.”
F.I. slaughter this week is estimated to be 582,000. This number is lower than the early in the week forecast by industry pundits who called for the shortened week’s kill to be 590,000 to 595,000 and considerably lower than the Urner Barry’s poll of industry participants average estimate of 602,300 head. Actual F.I. kill for the same period last year was 599,847.
Export Sales Review
US export business for week ending June 30 for wet blue and whole hides totalled 514,000 following the previous week’s 557,300. This year’s average weekly combined sales at 592,881 trended 77,500 ahead of last week’s. For comparison, slaughter for week 26 was 667,000 and the year-to-date average is 647,630.
Hide and wet blue export shipments totaled 582,700, around 10,000 under the YTD average of 593,454. Below in the three-years-to-date comparison of slaughter, sales, and shipments this year’s sales exceed the same time in 2010 by 3.7%, while slaughter and exports shipments are tracking nearly the same.
