US perspective – 26.03.13
26/03/2013
www.themaxfieldreport.com
Members of the trade doubting that there was any possible upside to big packer prices the last two to three weeks appear as if they have become “believers” as we have seen prices improve by $3-$4 / hide depending on the selections. Last week, sellers saw decent interest again, but what was worth noting is that instead of interest primarily only coming from China for the most part, we are told that there was a decent amount of interest expressed from Korea and Taiwan.
According to sources, trading levels last week saw BBS sell as high as $105.50 delivered, while interest on HTS was as high as $104-$104.50 delivered. Meanwhile, ideas from buyers on BS last week were as high as $103.50, while HNS appear as if they are also higher with ideas as high as $107 by the end of last week. In the meantime, better interest on cowhides and minimal offers allowed producers to raise prices here as well as we have sources sharing that cowhides are also up $3-$4 the past two to three weeks on decent volumes traded. Last week saw HNDC exchange hands at levels as high as of $87 delivered, while HNC were flitting with the $80 delivered level and HBC bordering on the level of $70 delivered.
Reports from day one of the Asia Pacific Leather Fair (APLF) in Hong Kong are that it was relatively uneventful. Sources have reported that it appears that there are slightly more exhibitors this year. Attendance seems to be following its usual trend with activity in the AM a bit sluggish; however, following lunchtime, there were many more people wondering the aisles. Expectations are for this morning [Tuesday] to be very busy and foot traffic tapering off later in the day, and day three of the show likely to result in little if any significant news.
In the meantime, sources overseas are sharing unconfirmed rumours of sales this past weekend on HTS as high as $106 delivered, while we can share that we know of traders who were bidding HTS at levels of $98 FOB yesterday; however, they did not have replies from packers as we went to press.
THE LOOK AHEAD
Day two of the APLF is about to take place and as of this writing, it certainly appears as if producers remain in full control of the market. In the meantime, it is evident there are more than enough tanners who are still in need of material and this, coupled with below average slaughter levels and producers possessing comfortable sold-forward positions, should make for a more than interesting day two. In fact, we are leaning towards the opinion with other members of the trade that there is an outside chance we could see prices for some steer selections reach $100 FOB before they board their flights to come back home.
THE SLAUGHTER
Monday’s cattle slaughter is off to a relatively slow start with only 106,000 head slaughtered. Checking with a few members of the trade, popular opinion was that many packers took advantage of sluggish beef demand to clean some of their holding coolers and is likely the reason for the short slaughter today. As a comparison, today’s slaughter is 13,000 head lower than the same day a week ago, while it is 17,000 head lower than the same day a year ago.
Worth noting is that the four-year running average slaughter for this week is 622,000 head. However, based on the fact that domestic beef demand is well below expectations and with packers still labouring at levels close to break evens, we find it doubtful they will want to come close to equalling the four-year average and will start our weekly guess at 599,000 head.
Last week’s cow / bull slaughter checks in at 139,000 head. This is a 2,000 head improvement over the week prior, while it is 12,000 head higher compared to the same week last year. Year-to-date, the cow / bull slaughter stands at 1,596,000 head and we are now 2,000 head or .125% higher than the pace we set a year ago.
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