US Perspective—10.05.16
10/05/2016
www.themaxfieldreport.com
Last week in the fat cattle trade we saw packers adhere to their full asking prices and by the second half of the week, a decent number of traders and tanners succumbed to the price ideas of packers. Popular opinion is that a modest number of hides exchanged hands at steady to incrementally higher levels, depending on the selection. Of even more importance are reports that there was a substantial amount of interest at levels $2-$4 under the asking prices of packers that was not concluded; some pundits are now leaning towards the opinion that packers have shifted momentum back into their favour.
Opinions are mixed as to exactly how many hides exchanged hands last week, as several packers as well as tanners are laying claims to seeing a considerable amount of interest last week. In the meantime, there are plenty of stories rumbling through the trade of packers selling direct to tanners and an argument probably could be made that packers sold at least a week’s worth of production, if not slightly more.
It appears there was trading on HTS at levels of $72-$73 delivered, while trading on BRS check in at $68-$70 delivered, depending on weight average and the packer. Interest on HNS reflected trading levels of $79-$80, while BBS were sold at $77-$79, depending on packer and weight average.
Elsewhere, it still appears there are a number of packers with more than ample offers of heifers, which is usual for this time of year. This is leading to unconfirmed reports of some producers pressing for sales. We also found interesting that there are some packers with offers of Jumbo and Super-Jumbo hides, which is unusual for this time of year.
Reports from the cowhide trade report that producers continue to struggle as interest and demand from cowhide tanners are running at unseasonably low levels. Unfortunately for producers, the few buyers who have the ability to consider volume type business for prompt shipment recognise the underlying pressure in the marketplace and if bidding, they are bidding aggressively low.
With regard to trading levels last week, sources report that obtaining a six as the first number for sales on HNDC on a delivered basis was nearly impossible, while rumours are claiming product traded last week at $57-$58 delivered. As it pertains to HNC, sources report the ideas of most buyers in the mid $40s, while ideas of most buyers for HBC last week were running in the mid $30s. It is unlikely that producers sold a week’s worth of production, leading to thoughts that it is likely we will see producers with offer lists that are fairly populated this week.
This is likely to be a very interesting week of trading for big packer hides. It would be difficult to imagine packers opting not to offer, especially with slaughter levels running 25-30,000 head higher than a year ago. That said, we look for packers to likely raise their asking prices this week and it will be interesting to see how packers address any bids they may see this week at last week’s last traded levels.
Meanwhile, we tend to believe those selling cowhides will continue to experience difficulty selling hides. Unfortunately, for producers of cowhides, this appears to be a larger issue than just price, as it appears business for most cowhide tanners remains poor, with many cowhide tanners facing problems with pollution, cash flow and difficulties in borrowing money from Chinese banks.
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