US Perspective—25.10.16
25/10/2016
www.themaxfieldreport.com
Reports from members of the big packer market claim that there was no shortage of interest from buyers again last week. However, with packers raising asking prices by $1-$2 depending on the packer and the selections, popular opinion is that there were not nearly as many hides changing hands last week as in the past two or three weeks.
Packers said they were still able to make a few “key” sales in limited volumes to tanners at some of their higher asking prices. We can attest that bids last week at the last reported trading levels did not draw any attention from packers; it appears they have their sights set on keeping prices firm, fuelled by the amount of interest they have been seeing the last few weeks.
As strong as sales of wet-salted hides have been over the past several weeks, the same cannot be said for sales of wet blue hides. Looking at the weekly USDA Export Sales Report, sales of wet blue hides in the third quarter averaged only 109,200 hides on a weekly basis. The first two weeks of the fourth quarter have seen sales average a meagre 54,500 hides per week. As a result, there are continued rumours of numerous wet blue producers pressing tanners for bids. We have even heard of some producers attempting to be creative and tying sales of wet blue hides into bids they have for wet salted hides.
Interest in cowhides last week was reported as moderate by most sources we spoke with, and noticeably less than the interest seen on big packer hides. Overall, producers started the week with intentions of trying to obtain more money for their hides; however, it appears that these efforts were met with a considerable amount of resistance from buyers, forcing most producers to regulate themselves to booking most sales last week at steady levels. There was a considerable amount of interest coming out of northern China last week leading to thoughts many tanners are now slowly back up and running.
We think the only real question is whether packers will raise asking prices again this week, in spite of popular opinion that there was not a lot of business concluded last week. We look for packers to be confident in their efforts this week, especially considering the amount of business that was not concluded last week. Buyers looking for “bargains” are likely to be disappointed, as we do not see packers succumbing to lower ideas.
Although packers enter the week with strong sold-forward positions, we are of the opinion that most have decent sales up until about the point at which they will no longer be able to ship to Asia in time for the Chinese New Year holiday (January 28, 2017). We do not look for slaughter levels to ease anytime soon (with the exception of a holiday) as profits for packers are just too lucrative. It will be interesting to see how committed producers are to keeping prices firm.
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