US Perspective—17.06.14
17/06/2014
www.themaxfieldreport.com
Interest on US steers last week was similar to the past couple of weeks. Some sources said they enjoyed a fair number of bids last week, while others shared that they were not as fortunate and only saw a handful of bids. Overall, sources report buyers made their best effort to bid prices lower and against popular opinion of the trade, packers “stuck to their guns” and held out for steady prices. At the end of the day, trading was concluded for the most part at steady levels for steer hides, while heifer selections still appear a bit soft and sales last week were $2-$3 under the last reported levels (however, our price guide was likely lagging the actual market).
Prices traded last week reflect HNS at $108, BBS in a range from $106-$107, while sales of HTS were at $103 and a few isolated sales at $103.50; there were even claims of $104, which we could not confirm. Meanwhile, BS sold at $102.50-$103, while we had an isolated trade as high as $103.50; sales of CBS were at $100.
Trading on heifers saw HNH check in at $87 and HBH at $83 with unconfirmed rumours of even lower prices accepted on HBH. Overall, sales volumes were deemed equal to levels seen in the past couple of weeks. In the cowhide trade, popular opinion was that interest was lacklustre last week with the exception of enquiries on HNDC, as we heard of a few tanners asking about offers. Meanwhile, sources report there were more than ample offers of cowhides last week from various origins around the globe and with the situation in China regarding pollution far from settled, buyers are not motivated buyers. In the meantime, we continue to hear numerous problems with producers obtaining timely letter of credit openings and the saving grace for producers in the US is that the number of cows being slaughtered each week is unseasonably low or we very well could have a market substantially lower than current trading levels.
Popular opinion in the trade is that producers barely managed to sell a week’s worth of production. Moving forward, even though slaughter levels likely are remain muted, it will be all sellers can do to hold prices steady due to plenty of unsold cows from other origins around the globe.
We suspect that packers will likely try to convey a firm-to-steady tone to the market, while slaughter levels are also likely to drift a touch lower due to packers’ margins regressing last week with higher live cattle prices and steady box prices. In the meantime, there are still plenty of questions regarding packers’ sold-forward positions and considering the outstanding sales number last week stood at only 2.7 million hides, it is not reflective of a strong position.
We remain in the slow season for most tanners and with holidays in Europe just around the corner, we find it difficult to believe there will be much upside to prices. That is why, if we were sellers, we would want to continue selling into the market as we still believe that we will see larger slaughter numbers as we move through the summer.
On cowhides, it certainly appears as if producers are limping along, scratching and clawing along the way. As mentioned in our commentary, the problem facing those looking to sell cowhides is that there are more than ample offers from Europe and Australia, while prices of Brazilian wet blue are also drifting lower, so there are more than enough opportunities for price-conscientious buyers. Meanwhile, although there are some members of the trade claiming the pollution problems in China are slowing again, we remind our readers that July 1 is likely to bring a whole new set of problems once all tanners are required to be complaint. That said, slaughter levels are at an all-time record low levels; however, at the end of the day, we do not think that this will be enough to prevent prices from drifting lower.
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