US Perspective—19.04.16
19/04/2016
www.themaxfieldreport.com
Last week saw the big packer market offer some conflicting and confusing reports. Packers were conveying messages that the market remained on firm ground and on the surface were dismissing ideas from buyers that were running anywhere from $3-$5 under their official asking prices, while insisting that they were in possession of strong sold-forward positions and in no hurry to sell. Behind closed doors, we were hearing very different reports, as a number of sources were insisting that several of the packers had a number of “special offers”, which appeared to vary from customer to customer. The common theme was that packers were aggressively looking for buyers interested in taking some substantial volumes and delivery much sooner than the official shipping times on offer.
As to sales last week, opinions are that sales at the last traded levels were not an easy task, although there may have been a handful of sales concluded at steady levels. Popular opinion is that the majority of business was concluded at levels $1-$2 lower than the week prior.
Sources report that HNS remain in good demand allowing packers to hold prices steady; however, BBS did not appear as if they fared nearly as well, as there were rumblings by week’s end that sales could be concluded at levels under the $80 delivered mark.
At least one of the packers continues to try to hold up the price of HTS; however, the consensus is that trading levels on this selection were lower last week, as there are rumblings of a decent number of sales concluded at $70 delivered and some even lower. CBS are struggling to sell at levels in the mid-$60 delivered. Also worth noting is the influx of lighter-weight heifers starting to drag on the market and reports claim a number of sellers appear as if they have more than ample offers. As a result, trading levels last week were down a couple of dollars versus their last traded levels.
Last week was a difficult week for most cowhide producers. Overall, sellers appear as if they have come to grips with how difficult the situation is surrounding the market; however, it appears most producers continue to have reservations about trading the market substantially lower than their last reported trading levels. Producers in the US are also facing pressure from cowhide producers in Europe and Australia and South America to a lesser degree, who also appear as if they have more than ample unsold inventories of cowhides.
We remain of the opinion that we are in a demand-driven market, keeping in mind that it does not appear as if there are any substantial improvements in demand on the horizon. This, coupled with the fact that slaughter rates are slowly exhibiting signs that they are ready to start increasing as we move forward, is not setting us up for an enjoyable second quarter of the year, especially considering that producers have not shipped in excess of the slaughter a single week this year.
We tend to believe many of the rumours swirling last week accusing many of the trader and some of the packers of quietly attempting to conclude business direct with tanners at levels below the last reported trading levels. In turn, we look for this trend to continue for the interim, as the next five-to-six weeks are historically known as some of the worst demand weeks of the year for hides.
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