US Perspective—26.07.16
26/07/2016
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Last week in the big packer market, packers made their best efforts to hold prices as close to steady as possible, in spite of popular opinion that a number of packers had more than ample product to sell.
Overall, it appears packers anchored on trading as close to steady levels did not have a successful week of trading, while packers more inclined to negotiate prices appear as if they were able to sell more hides last week. According to members of the trade, popular opinion is that packers likely did not sell their production last week (worth noting, slaughter levels are running 10-11% higher than the same time last year). We must remember that the last two weeks were two of the smallest sales weeks of the year.
We would call trading levels anywhere from steady to $2-$3 lower, depending on the selection, the packer, and quantities sold. As an example, HNS and HNDS appear as if they were able to trade close to their last reported trading levels, while trading levels on BBS appeared as if they were roughly $1-$2 lower than last week. Trading levels on HTS/ BRS and Jumbo & Super-Jumbo selections appear as if they suffered the worst of the price declines with prices off anywhere from $2-$3. Elsewhere, reports from the cowhide trade continue to claim a relatively lacklustre interest. Overall, the consensus of the trade is that a number of producers are feeling some pressure to sell, while it is also believed many producers do not possess the sold forward positions they are claiming.
We have heard of a few producers a bit more anxious for sales last week and attempting to encourage perspective buyers to share their ideas; however, once producers discovered most of these buyers were looking to buy at levels $3-$4 lower than the lowest ideas of sellers, there were not many hides exchanging hands last week. Sources share the few hides exchanging hands last week sold at levels $1-$1.50 under their last reported trading levels, while a number of sources share that if producers had been willing to consider discounts closer to $2-$3 per hide, they could have sold more hides last week.
We remain of the opinion that sales have laboured these past three or four weeks. As a result, we believe there are a number of producers who have slowly seen their sold-forward positions eroded. We look for offer lists both from packers and processors to contain a full complement of offers, as well as many selections offered in sizeable quantities, and some selections offered for quick shipment.
We continue to hear reports of a number of tanners requesting to delay shipments (the reasons or excuses are too numerous to list). This is forcing the hands of sellers to enquire if buyers would be willing to take delivery of their hides a week to ten days earlier and is only lending further support to the argument that hide prices are under a modest correction.
Slaughter levels continue to hover around the 600,000 head level and this is 10%-11% higher than the same time last year. This coupled with oppressive heat in much of the Midwest, along with summer holidays in Europe and to a lesser degree in parts of Asia, has the number of buyers limited. In addition, it is worth noting, there are hide producers in both Europe and Australia looking for business as well, and that is why if we were a seller, we would continue to sell into this market at the best price possible in order to keep product moving.
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