US Perspective—03.05.16
03/05/2016
www.themaxfieldreport.com
Last week the big packer trade saw a real-life game of chicken develop. Sellers, who continue to insist that they possess strong sold-forward positions, refused to succumb to the lower ideas of buyers, with packers touting that they passed more business than they booked last week. In the meantime, popular opinion amongst most pundits (who were not packers) believed that packers would have to succumb to underlying pressure facing the market – the only problem is that it appears no one bothered to inform the packers.
There were a number of rumours swirling towards the second half of last week accusing some of the packers or traders of supposedly being willing to listen to lower ideas from some buyers; however, we were not able to confirm. Meanwhile, as to the number of hides sold last week, there are claims by at least a couple of the packers that they were successful in selling a decent number of hides; however, pundits are suspicious of these claims, especially with most packers insisting on no worse than steady trading levels.
Overall, as it pertains to prices, from our vantage point, it appears trading levels were in line with levels of a week ago, while it was very clear that if sellers had been willing to discount their prices by $1-$2 they could have sold much larger quantities.
Last week in the cowhide trade appeared to be another difficult week of trading for producers. Overall, it appeared a number of sellers were anxious to conclude business; however, the ideas of buyers and sellers were not on the same page last week. Producers appear as if they do not possess sold-forward positions anywhere close to those of big packers, as we were hearing a number of reports of several producers with multiple selections for prompt shipment.
In the meantime, there continue to be numerous reports of cowhide producers from around the globe also struggling to sell their unsold inventories last week; it appears as if buyers who have the ability to consider large volumes and prompt shipments have some very aggressive ideas when it comes to the prices they are willing to pay.
As to sales last week, popular opinion is that last week was a sluggish week of trading and it is unlikely that producers were able to sell a week’s worth of production. Producers made their best effort to hold prices steady, while it appears the majority of hides sold were at levels $1-$2 under the last reported trading levels, depending on the selection.
As to our initial thoughts as to what we expect for this week, we are leaning towards the opinion that this will be another difficult week for those selling hides. We look for the majority of buyers to point to the May Holidays, coupled with slower than expected leather orders, as yet another reason not to buy this week, as we are in the usual “slow time” for most tanners.
Slaughter levels are expected to continue to rise slowly and this is expected to test the will of those selling hides, as there is widespread speculation that sold-forward positions of sellers are slowly dwindling with the larger harvest numbers.
In the meantime, we tend to believe sellers have to be encouraged by the amount of interest they saw last week, although a substantial majority of it could not be concluded due to the ideas of buyers being well below levels deemed tolerable by sellers. That said, we look for offer lists at the start of the week to be in line with last week’s, although we would not be surprised if we did not see a little bit more effort by both buyers and sellers to meet somewhere in the middle later this week.
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