US Perspective—04.10.16
04/10/2016
www.themaxfieldreport.com
Reports from the big packer trade are calling last week a decent week of sales for packers. Sources claim the week started with most buyers sharing ideas that were $2-$3 under the last reported trading levels, with packers indicating they had no interest in trading the market lower.
As the week progressed, buyers reluctantly resigned themselves to the fact that if they were going to buy they would have to pay at least steady money. There are also rumblings that some producers of wet blue sharing that they were a bit more successful putting together some voluminous type business last week, although sources are quick to point out that there is still more than ample offers of wet blue as the week came to a close.
Elsewhere, slaughter levels continue to run above levels of a year ago and last week’s slaughter set a marketing year high with 611,000 head harvested. In the meantime, opinion of pundits is that it is likely we will see large slaughter number continue, especially with live cattle prices hovering close to $100 per hundredweight.
It is certainly appearing as if packers have enjoyed a couple of decent weeks of sales. In addition, many packers towards the end of last week insisted that they possess decent sold-forward positions. This, coupled with a fair amount of interest that was not concluded last week due to buyers’ refusal to improve their ideas, is leading us to suspect there is a good probability that we will see packers attempt to raise their asking prices this week.
Packers will need to keep an eye on slaughter levels. Forecasts are calling for unseasonably larger than expected harvest numbers for the fourth quarter, with many pundits looking for numbers to be somewhere in the region of 5%-6% higher than a year ago. Meanwhile, as of this writing, it appears packers have been able to absorb the added volume holding prices steady or incrementally higher and it will be interesting to see if packers can keep momentum on their side as slaughter number continue to rise.
We have conflicting reports as to leather business for tanners. When speaking with some pundits, they insist leather business is better than many tanners are reporting, while there continues to be plenty of speculation that many of the brands are specking more leather into their new designs. Also worth noting, when watching television, many of the women have footwear (boots) that are either halfway up their calf, if not knee high and if this is an early indication of where fashion is headed would certainly be a boost for the industry.
We are encouraged that producers have been able to hold prices relatively stable over the past couple of months in light of larger harvest numbers. That said, we are modestly encouraged by the demand from tanners and it is certainly appearing to us that demand may be a bit better than tanners are willing to admit.
Share this story:
