Kill levels begin to rally

Trading during the past month took place against the backdrop of the High Point furniture show. The show identified the growing use of cut and sewn seat covers being produced in China and Argentina. These are being used on leather sofas and chairs which are produced in the US and reflect a similar situation to that with American automotive seat producers who have been sourcing from Latin America. There was also resistance from retailers not wanting to buy in volume who expressed concerns over having too big an inventory for the coming season. One Asian furniture manufacturer who used to source hides largely from the US admitted to using Brazilian wet-blue for their lower end production and Australian hides for their higher end sofas and chairs. The Japanese meat embargo seems likely to stay in place for some time yet after a period in which hopes of a resolution have been raised, dashed and then raised once more. Currently, it would appear that negotiations have slowed down and there is little hope of the embargo being lifted until next year. There is even speculation that Japan may want to wait until next June when USDA completes twelve months of its enhanced BSE surveillance programme. Even then, Japan may stick to its avowed intent of accepting only boneless beef and offal from cattle less than twenty months of age. According to Cattle Buyer Weekly, slaughter concentration has been largely unchanged with the top five packers' share of total slaughter remaining relatively consistent since 2002. Tyson Foods (IBP), Cargill (Excel), Swift, NBP and Smithfield Foods account for a daily slaughter capacity of 103,350 head. The six largest packers killed 81% of FIS with the top three alone responsible for 63.2%: Tyson 26.6%; Excel 22.5%; Swift 14.1%; NBP 9.0%; Smithfield 5.5%. The three largest packers generated 73.2% of the total steer/heifer slaughter. Federally inspected slaughter for the four-week period ending October 16 averaged 629,500 head/week. The nine-month figures showed a total of 24,488,000, down from 27,320,000 for the same period in 2003. However, kill figures also began reversing the 2004 decline of -10.6%. Exports of raw hides for the four-week period ending October 7 put Korea in first place with 460,300; followed by China with 452,300; Taiwan 152,000; Mexico 127,200; Japan 112,500; Thailand 108,200; Hong Kong 103,900; Vietnam 21,800; Italy15,900; South Africa 10,400; Canada 9,600. In addition Italy took 124,200 calf and kip; China 40,300, Japan 16,000; and Hong Kong 2,100 kip. Wet-blues for export were sold as follows: Hong Kong 119,500; Italy 57,200; South Korea 48,300; Taiwan 44,100; Mexico 42,300; China 19,400; Thailand 15,100; Dominican Republic 12,000; Japan 7,700; Portugal 3,000; Canada 2,800; and 2,100. Italy was the destination for 1,981,000lb wet-blue splits; Hong Kong 933,300lb; Mexico 566,200lb; Indonesia 200,000lb; and China 2,900lb.