US Perspective—14.04.15
14/04/2015
www.themaxfieldreport.com
Last week saw packers start the week with intentions of pricing cattle at trading levels towards those of the end of the week prior. However by the middle of the week it became clear that there were still too many sellers looking to sell and as a result, those looking to sell hides had little choice but to concede to the lower ideas of buyers.
Overall, popular opinion of the trade is that prices on most selections were $2-$3 lower, while it could be argued that HTS may have experienced the largest of declines. Meanwhile, opinions are mixed as to whether or not packers were able to liquidate their production last week, even though we saw the smallest non-holiday week harvest in more than 60 years.
As to trading levels last week, sources report the majority of HTS sold at levels of $96-$97 delivered, while we were hearing similar reports of sales on BS. Meanwhile, producers were forced to succumb to lower ideas on BBS as we heard trading levels were running around $103-$104 delivered, while it appears the lack of HNS in the mix is affording producers to still be able to obtain decent trading levels as we heard sales at $106-$107 delivered.
Worth noting, we have reports of some business concluded over the weekend as we have sales reported on regular weight HTS reflecting levels of $89, while sales on Jumbo HTS check in at $98.
As to what we expect this week, without question, it appears buyers have regained control of the market. In the meantime, considering the rapid decline we have seen in prices over the course of the past two or three weeks, we tend to think that both buyers and sellers might welcome a bit of stability in prices, as history has proven a number of times that a rapid decline in prices does not truly benefit anyone.
This week, we look for producers to start the week with asking prices in line with trading levels towards the end of last week. In the meantime, we would not be surprised to see some buyers continue to test the sold-forward positions of producers by bidding aggressively lower. Unfortunately, until producers are in a stronger sold-forward position, buyers will continue to test them.
Elsewhere packers’ margins are mired in some of reddest ink in recent memory due to a combination of record live cattle prices and beef demand that has not improved as it does historically this time of year. Things are so dismal for packers collectively that we saw the smallest non-holiday week harvest we have seen in more than 60 years.
In spite of smaller slaughter numbers, retailers have not responded. Sources share that retail interest has been focused elsewhere. Meanwhile, wholesale pork prices are running at half the cut-out prices of a year ago yet retailers have held store prices for pork close to the same pricing level. The result has been windfall margins in pork for processors and retailers and features all across the country have pushed pork cuts.
The US Department of Agriculture has forecast that 5% more cattle to be harvested in 2015, but this number appears to be off the mark, although lower numbers are partly offset by higher slaughter weights. According to reports, carcass weights for steers and heifers remain at record seasonal highs and easily heavier than a year ago, because cattle feeders continue to feed cattle longer as corn prices remain at or below $4 per bushel.
The west coast dock strike combined with an out-of-control dollar value has caused beef exports to suffer and encouraged beef imports. The result has been much more of the beef production dedicated to our domestic market.
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