US Perspective—22.12.15
22/12/2015
www.themaxfieldreport.com
Last week saw packers once again opt not to offer to traders, choosing only to offer directly to tanners. According to various sources, offer lists for the most part mirrored the week prior’s, while packers attempted to raise asking prices on a few of their more popular selections. Packers continue to insist they possess strong sold-forward positions, in spite of the two largest slaughter weeks of the year taking place the past couple of weeks.
The majority of traders reported a rather lacklustre week of trading as they had little product to offer. Meanwhile, those traders holding a long position, report that the majority of interest they saw last week from buyers was anywhere from $2-$4 under their asking prices, while packers reported they only had some modest interest from buyers last week with the majority of their ideas $1-$3 under asking prices.
Popular opinion in the trade is that it is unlikely producers sold their production last week, while in regards to trading most pundits are calling prices steady. However, prices appear as if they have peaked for the moment, while many pundits share they are starting to feel some softer undertone to the market.
Reports from members of the cowhide trade are similar to those in the big packer trade. The week started out with most producers not willing to offer their hides to traders, opting to only offer direct to tanners. Overall, the consensus of the trade is that this is the reason for a general lack of interest last week and those buyers with interest had ideas $2-$3 below the target levels of sellers.
The next two weeks are likely to be two of the smallest weeks of the year for slaughter numbers. In the meantime, there continue to be plenty of questions as to whether or not producers have sold enough hides in the past two or three weeks and many pundits are of the opinion that sold-forward positions for many producers are not nearly as strong as they are touting.
Supporting this opinion are reports that several sellers were countering bids last week at prices $1-$2 lower than their asking prices, although some members of the trade would argue that levels being countered were simply equal to the last traded levels for most sellers. In the meantime, quantities being bid by tanners are noticeably smaller than normal according to some of our sources, as tanners continue to claim that leather orders for the first quarter of 2016 are not equal to levels of a year ago.
We look for another week of lacklustre interest and at the end of the day, we tend to agree with pundits who are of the opinion that prices appear a bit top-heavy.
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