US Perspective—18.11.08
18/11/2008
The Jacobsen Commentary and Market Opinion—18.11.08
Courtesy of www.thejacobsen.com
The steer market has taken a sharp downturn over the last few weeks and this is particularly evident this week. Most steer selections are averaging at $3–$5 down from just a month ago. Bulls continue to be soft as reports are few and far between. The reports that do come in tend to be lower. The cow market continues to sink and there doesn’t seem to be an end in sight. The issue continues to be demand and, simply put, there is little demand for hides.
Production and shipment are complicating the process as well. What was a $32 cow a month ago could be a $25 cow hide upon arrival. The renegotiation process is inflicting huge financial casualties on processors. In addition, as hide prices sink, the market for finished leather is responding similarly as the buyers want the price of the finished goods to mirror the decrease in the price of raw material.
Tanners are having a hard time keeping up with the downward spiral. Unfortunately for the producers, the buck (and we mean that in the greenback sense) stops with them. As North America is getting ready to settle into its holiday season, there will be reduction in the cattle slaughter as beef demand wanes. This may offer some help to the packers and processors who are currently having trouble selling their hides and are rumored to be warehousing them.
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