The Jacobsen Hide and Skin Bulletin. Commentary and Market Opinion. Thursday, June 3 2004
Thursday’s activity was on par with the rest of the week as sellers reported bids were few and far between. Bidding levels were approximately $2 below the targets of producers and those with interest were more than certain they would lose their bids once any type of counter above the bidding price was presented. By the end of the day Thursday, it appeared both sides (buyers or sellers) were yet willing to concede and speculation was we might go the week without any sizeable volume trading. Of course with the limited activity, the bears were quite active in the market attempting to talk the market lower, while producers were holding out for hopes that a forecasted reduction in the slaughter due to profit margins declining for packers, might allow for a little more time to hold out for more money. For the balance of the week, we have our doubts if any serious volume of trading will take place. We understand there is some limited volume of bids at $68 delivered on HTS which depending on freight calculations may work; however the vast majority of the limited bids which are out there are too far below ideas to pursue. Therefore, we are still of the opinion most will take this week as a “wash” and look for buyers to apply additional pressure next week in hopes to soften the ideas of sellers. For further information visit www.thejacobsen.com
The Live Cattle Markets
(Courtesy, agcenter.com)
The futures rallied and closed up $2.25 in the spot month at $88.90 following a sharp rise in the choice cutout. At a time when the choice/select spread seasonally narrows the heavy choice was up $2.67 further widening the spread heading into summer. Cattle trade took place with packers paying $90 for most of the cattle almost $3-$5 higher than the bulk of last weeks trade. The notion of Canadian trade resuming continues to be pushed to the back burner causing downward revisions in cattle slaughter numbers.
Corn prices, for the first day in many, were off slightly closing down for the day. Much of the corn that has not been planted by now will not be planted due to it being so late and corn crops that took on storm damage will most likely not be replanted, but planted to soy beans. This could sharply reduce the overall corn figures. Corn has been moving up and down in very volatile trading patterns reflect the condition of the new crop vs. the low carryout number. Corn now is at a three month low after moving well above $3.25 bushel. Good rains and successful plantings provided a foundation for record crop predictions. The carryover still remains historically low and any threats to the crop can send prices skyrocketing.
The feeder market has been an unruly animal, at times very hard to predict. Feeder cattle prices look to be moving higher resulting from many feeders who have opted to stay out of the market up to this point deciding now is the time to step back in. Some feedyards that have been running low on numbers have made the call to replenish supplies and get their numbers back up which will exert further upward pressure on what seems to be an already over-priced feeder market. Futures prices reflect this optimism and speculators have been buying the August feeder futures expecting higher prices.
