US Perspective—15.11.16
15/11/2016
www.themaxfieldreport.com
Last week packers opted to leave offer lists unchanged, with the exception of removing offers of regular weight HTS and BRS due to dwindling numbers; many packers are behind in outstanding shipments of these selections. Through the course of the week, numerous sources reported seeing only a minimal number of bids, while those fortunate enough to have bids shared that most buyers were testing the will of sellers by bidding $1-$2 lower than the last reported trading levels.
Overall, packers refused to chase the lower ideas of buyers and the limited number of hides that changed hands last week did so primarily at steady levels. In the meantime, we heard unconfirmed rumours of some sales at higher levels, which we tend to believe were sellers bragging, while there were also some isolated rumours of sales concluded at slightly lower levels on a couple selections, which we are not inclined to believe either.
The sentiment of the trade is that last week was not a busy week of trading and it’s highly unlikely that packers cleared their weekly production. Last week’s USDA Export Sales report caught the trade by surprise; we were not aware of any pundits who thought there were 400,000-plus wet-salted hides sold the week prior, supported by comments from a number producers who shared that their own sales did not measure up to their usual percentage of the total. Also worth noting, perceptions in the trade that one of the wet blue producers was still dealing with a substantial number of unsold hides may be coming to an end, as the producer in question is telling members of the trade that the lion’s share of the unsold product is now accounted for.
Elsewhere, reports from the cowhide trade last week were similar to those in the big packer trade. Overall, sources report that sellers left offer lists unchanged in spite of speculation by the trade that some producers were not as well sold on HBC and to a lesser degree HNC. Meanwhile, interest on HNDC remains decent with most sellers continuing to lay claims to enjoying strong sold-forward positions.
The number of cows in the slaughter mix continues at unseasonably high levels. Last week marked the third consecutive week in which we have seen the highest number of the year at 125,000 head, while for the year, the cow slaughter is running close to 300,00 head higher than last year.
As to our thoughts for this week, we look for this to be a very interesting week of trading. Expectations in the trade are that sellers will start the week continuing to lay claims of possessing strong sold-forward positions in spite of what are believed to be lacklustre sales over the past couple of weeks, coupled with slaughter levels that continue to exceed levels of a year ago by 10%.
Also worth noting, there were numerous rumours accusing many of the US traders of offering at levels a dollar cheaper by the end of last week and it will be interesting to see what their offers will look like this week. In other news, the US dollar substantially appreciated against many major currencies last week following the US presidential election. This will make hide prices appear even more expensive to tanners who were already balking at current trading levels that are running anywhere from 12%-15% higher than levels of a year ago depending on the selections.
Opinions remain mixed as to leather orders for most tanners. Overall, tanners appear as if they are willing to take delivery of their outstanding orders looking for product to arrive prior to the Chinese New Year holiday (January 28). However, the obstacle at the moment is lining up enough tanners willing to discuss delivery of product for the period following the holiday and for now, this may be the fly in the ointment for most producers.
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