Most packers producing heavy Texas steers sold since our last report between $66.50-$67 in late April to $67-$67.50 by mid May. Jumbo Texas were reported at $71-$72 in early May but as the end of the month appeared, such bids were being countered and passed by tanners at $73.
Interest was fairly decent for branded steers but prices remained essentially steady for the past month. Most sales were concluded between $65-$65.50, although here and there, under special circumstances, $66 was heard. Colorado steer activity perked up during the third week of May but prices remained steady to April between $63-$64.
The majority of trading in butt branded steers in the past month took place between $66-$66.50 with both buyers and sellers stymied in attempts to buy even $0.50 higher or lower. As usual, the selection saw its normal share of domestic support.
Heavy native steers traded in the same narrow price range between mid March and late May at $67-$67.50. Export interest was comparatively good, no doubt due to the narrow price differential in the price of steers with multiple brands and natives that are brand free.
As temperatures moderated around the country, the availability of heifers increased. However, this had no ill effect on price. In the southwest, some sales of branded heifers were posted at $61 with attempts to obtain $62-$63 unsuccessful. River area brands traded between $57-$58, very close to prices confirmed on heavy native heifers between $59-$60.
Although certainly not under any pressure, buyer demand for just about all types of cows seemed a little more subdued by mid May. Sales of brands were recorded as low as $42 but others from northern points managed $45.
Western origins with attractive freight were able to obtain bids in the area of $45-$46. Native cow prices reported were essentially steady in a range of $51-$54 depending on average and origin. In the southeast, some packer conventional natives traded at $49.
Holstein steers have been in good demand since our last report with prices reaching as high as $73. Dairy cows saw less than keen interest so far this month but most sales were steady between $59-$60. Sellers were typically not anxious to force any sales. Premium packer Holstein cows were quoted at $63. In the southeast, conventional dairy cows sold at $49.
Producers of bulls continued to be comfortably forward although a few more offerings appeared in the second half of May. In the southwest one sale of branded bulls was posted at $62 with advantageous border freight and extended payment terms. Natives were bid at $63 to one packer and countered at $65. Other natives were offered at $64 but found tanner resistance.
The number of offerings seemed to exceed the number of machine damaged and renderers that found customers as May wore on. Offerings of machine damaged material from various producers were seen at $50 for the most part. Fleshed 1&2 renderers could be bought under $44 and equivalent thirds for less than $34 but we were unable to confirm any sales.
Export figures produced by the US department of Agriculture in early May showed that the combined outstanding raw and wet-blue contracts still to be shipped set a new record. A total of 7,032,600 pieces were still to be shipped against previous sales. This was up more than 3% from the previous record the week before. Many conversations took place in the trade pertaining to the huge outstanding numbers.
Most are perplexed and develop many theories why the outstanding is so high and the market remained steady. In addition, many found it difficult to figure out what has caused the record breaking outstanding totals. Some thought that perhaps the USDA numbers are wrong.
Our view is that the USDA numbers are probably right. We also believe that sellers, betting on the slowdown in demand and resultant prices in May and June that almost always occur, sold themselves as far forward as they dared and are very extended. Some of these producers may have also calculated that they are concerned that some of their buyers will be unable to take delivery if they will be late shipping so have sold further forward as a hedge.
Regardless, the rationale we have as to why outstanding sales are now so much higher than ever before, in a word, are containers. If containers were available on a normal basis, our contention is that the outstanding sales total would be normal as well.
As May comes to a close, we find it difficult to find any reason for prices to trade higher or lower in the near term. However, we still anticipate the seasonal slow down in leather demand that comes more often than not at this time of year to cause lower tanner demand. Therefore, we think that sooner or later, whenever the market does move again, we will see incremental declines.
