Courtesy of The Maxfield Report

www.themaxfieldreport.com

Members of the big packer trade report that last week for the most part was another uneventful week of trading. We did speak with some who reported that last week was busier for them than the prior week; however, for every member laying claims that business was better, there was at least one, if not two members of the trade sharing that their business was less than the week prior.

We are hearing that there was a decent number of bids; however, popular opinion is the amount of business concluded was not much different from the week prior. Sources share that ideas from buyers were running anywhere from $2-$4 under official asking prices, and sellers appeared not to have much interest in chasing such low ideas.

As far as price levels last week, HNS appeared as if they could still bring $115-$116 delivered, while sales on BBS were a dollar lower. In the meantime, we heard trading levels on HTS ranging from $108-$112 depending on the origin and weight average, or if the sale was by a packer or trader.

Meanwhile, there is speculation by a few members of the trade that some of the packers were attempting to quietly book business towards the end of the week direct with tanners, at levels under the most recent trading levels reported on our price guide and we will look to follow up on these stories this week.

Members of the cowhide trade also reported an uneventful week of trading as the fallout from the new pollution regulations in China continue to wreak havoc. We have heard that European cowhide dealers succumbed to prices $2-$3 lower towards the end of last week and if these are correct, this will not likely bode well for those trying to sell cows at prices steady with their last traded levels.
The redeeming quality for those selling cowhides is that the number of cows in the slaughter mix is at historic lows, as only 18.25% of the animals slaughtered last week were cows, the lowest percentage in the last five years.

As far as trading levels, with most buyers pushing for lower prices, there were not many sales concluded last week. We were able to round up a handful of sales at steady levels; however, there is speculation that producers are likely trading at levels below the last reported prices and attempting to keep these sales as quiet as possible.

THE LOOK AHEAD

As to what we expect for this week, we look for packers to try to continue to crusade that the hide market is on steady ground. However, we believe we have started to see the first signs of hairline fractures. This, coupled with slaughter levels likely to exceed last week and the fact that producers have not shipped in excess of the slaughter four out of the last five weeks, leads us to suspect producers are going to start feeling the pressure of larger numbers, especially selections other than BBS and HNS.

Meanwhile, members of the cowhide trade are making their best effort to hold up the resemblance of a market that is steady; however, with the exception of a few premium cow selections, this market is certainly facing its fair share of problems. That said, even though slaughter numbers are trailing seasonal levels substantially, we are of the opinion producers are powerless and likely we will see lower prices.

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