US Perspective—13.09.16
13/09/2016
www.themaxfieldreport.com
There was a fair amount of interest last week from tanners, but it was not quite as busy as the week prior. The majority of buyers were looking for prices $2-$3 under the last reported trading levels of packers and for the most part packers refused to follow.
We have heard reports that at least a couple of the packers apparently “softened” their price ideas late last week, as we have rumours of sales completed quietly at levels at least $1 lower than the last reported trading levels.
There were reports last week from China, and especially the Wuji area, claiming tanners there have been forced to close for pollution issues and it does not appear as if they will be allowed to resume production as early as originally planned; many were unable to comply with governmental regulations. New leather business appears geared towards requiring higher volumes of better-quality hides and this is not good news for those selling cowhides in the US, especially with the number of cows in the slaughter mix running at unseasonably high levels.
The market on the surface ended last week in a stalemate with sellers insisting that they possess strong sold-forward positions. In the meantime, there were certainly more than ample rumours running through the trade contradicting these claims and it will certainly be interesting to see how committed producers are to insisting upon their asking prices this week. Slaughter levels are likely to continue at their highest levels of the year, while many tanners continue to insist that business is not equal to a year ago.
In the meantime, harvest levels for chicken, beef, and pork are running at extremely high levels. According to information in Cattle Buyers Weekly, chicken supplies are the most burdensome, totaling 819.1 million pounds, 6.9% higher than a year ago and 19.9% higher than the five-year average. Next highest is pork at 600 million pounds, which is 5.3% lower than the burdensome levels of a year earlier, but still 10.5% higher than the five-year average. Meanwhile, beef supplies totalled 469.3 million pounds, 2% higher than a year ago, and 8.3% higher than the five-year average.
Elsewhere, cold storage numbers revealed there are plenty of pork bellies, chicken wings, and chicken breasts waiting to find a home.
As to our thoughts for this week, we tend to believe it will be difficult for those selling hides to achieve higher prices. We continue to lean towards the opinion that supplies of many different selections are accruing, especially heavyweight steers and wet blue hides. That is why we continue to insist that until these selections are addressed and we see better requests from tanners to ship hides, it will likely mean the upside potential in this market is limited; we would continue selling into the market if we were a seller.
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