Steer prices gradually eased over the past month. Benchmark heavy Texas steers that sold $95-97 closed in very limited volume at $94-95, or $102-104 C&F as opposed to $101-102. Butt-branded steers were the most favoured selection this month and pretty much throughout the quarter. They traded on a par and occasionally at $1 more than heavy native steers. Prices for the period were generally between $102 and $104 for both selections.
The fact that prices did not rise during this period could be said to have refuted the traditional logic that lower supply should equate to higher prices. This was not so in North America, as slaughter for the month, as well as the entire first quarter of the year, was at a historically low level. China, the engine that drove demand – in this writer’s view – up to record levels last year, for various and sundry reasons, has not displayed the same appetite so far in 2015. Further, few will argue that sales of leather are lower than they were a year ago.
Branded cows generally rose between February and March – nearly 10% – but levelled off in recent weeks. Here’s a case where supply did seem to help prices as slaughter was down and producers were very well forward sold. This forced buyers to meet seller price demands. Native and dairy cows also firmed during the period.
Finally in union
The big news since the last report was an agreement between the West Coast dock workers union and the port operators. Since July, union members had slowed their handling of container shipments in and out of all Pacific ports. The slowdown increased in the latter part of the year and reached a crescendo in January and February. At one point, 20 container ships were standing off the port of Los Angeles and a similar number at Oakland.
It wasn’t just hides and wet-blue that were impacted. In addition to a multitude of all types of goods imported and exported between the US and Asia, were large quantities of footwear and other leather products. This inability
to ship caused hides to back up in producer warehouses, parts of their facilities and in outside storage as well. This stressed financial and warehouse space to the point that any domestic or Mexican buyers who could pay for and accept immediate shipment found eager sellers dollars below established levels.
Finally, in early March, a resolution evolved and the ports were back to full production. Sources say that it will take two to three months to bring shipping and container availability back to normal.
On the supply side: statistics can be confusing
The United States Department of Agriculture (USDA) said recently that all cattle and calves in the US and Canada combined to a total of 101.7 million head on 1 January 2015, up 1% from the 100.7 million on 1 January 2014. All cows and heifers that have calved, at 43.8 million head, were up 1% from a year ago.
All cattle and calves in the US as of 1 January 2015 totalled 89.8 million head, 1% above the 88.5 million on 1 January 2014. All cows and heifers that have calved, at 39.0 million head, were up 2% from a year ago. All cattle and calves in Canada as of 1 January 2015 totalled 11.9 million head, down 2% from the 12.2 million on 1 January 2014. All cows and heifers that have calved, at 4.78 million, were down 2% from a year ago.
By the same token, USDA reported in its monthly cattle on feed report that placements into feedlots on 1 March were down 8% from a year ago. This means that packers will have that many fewer cattle to slaughter four to six months hence, at a time when some slaughter pundits have predicted that kills will pick up significantly in late April into September.
Recently, federally inspected slaughter up to 21 March was 518,000 head. This is down from 524,000 the week before. The total for the previous year to date was 579,000. Slaughter as of the 21st was 6.088 million. This is 7% below a year ago when it was 5.544 or a difference of 544,000 head. This year’s slaughter so far is running more than 3% below 2014 as well.