US Perspective—20.03.12
20/03/2012
Courtesy of The Maxfield Report
www.themaxfieldreport.com
The consensus of the trade is that interest on big packer hides fizzled last week. Reports claim the vast majority of buyers opted to remain on the sidelines as firm asking prices from packers, coupled with numerous people travelling in Asia this week, led tanners to believe that if they delayed their buying decisions they might be rewarded with lower prices.
Overall, popular opinion in the trade is that packers will be hard-pressed to sell their slaughter last week. Meanwhile, it appears the few hides that exchanged hands last week did so at levels of roughly a dollar lower than their last traded levels. It appears the early sentiment of the trade is that even these levels will be difficult to duplicate this week. It will be interesting to see the prices on offer from the packers and traders travelling in Asia this week and to see how many hides they have for sale.
Reports from the cowhide trade are claiming a lacklustre week of trading with sellers having little to show for their efforts. The expectations of some members of the trade are that sellers will have no choice but to accept less money this week if they are to sell hides and it will certainly be interesting to see how aggressive sellers are this week.
Looking ahead to what the week may hold, we suspect sellers who have people travelling will not offer to the public this week, allowing those who are travelling to sell directly to customers they are visiting. In the meantime, we would not be surprised if the few producers who do not have anyone travelling are likely to soften their ideas this week and it will be interesting to see how much sellers are willing to concede from the last traded levels. That said, there are rumours swirling that there are already bids on big packer steers at levels below $90 delivered, while we have heard rumours that bids on HNDC are no better than the mid-$70s.
We understand why some buyers would be looking for a significant reduction in prices, especially after the steep increase we have seen as a result of the step reduction we saw in the nation’s slaughter at the end of January and February. Several tanners have commented to us that they felt “forced” to over-pay for hides in the past several weeks and we suspect many buyers will be looking to recover some of the money they spent on hides during the upturn. The wild card in the equation is the slaughter, as popular opinion is that live cattle numbers will remain tight at least for the next couple of months, and considering packers paid $203 for cattle on Friday, we do not think anyone will be in a hurry to slaughter large volumes.
Beef imports exceeded exports during January for the first month since August 2010. Beef exports during January were the lowest for any month since April 2010. January exports were down by 4.4% compared to a year ago, largely because Hong Kong purchased almost 3.2 million kilos less US beef than in January 2011. January beef imports were up by 28.8% compared to a year ago and reached the highest level since June 2011. In total, 8.6% of January beef production was exported. January domestic retail beef demand was up by 8.1% compared to a year earlier; but export demand for US beef was down 1.9%. Packer demand in January for fed cattle was up by 3.8% compared to January 2011.
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