US Perspective—22.11.16
22/11/2016
www.themaxfieldreport.com
Last week saw packers leave offer lists unchanged. Interest from buyers was unexpectedly light; most expressed no interest in buying hides at steady levels. There was some light interest from buyers $1-$2 under asking prices, with packers refusing to succumb to lower ideas, while buyers with ideas $3-$5 underneath asking prices found packers unwilling even to recognise their bids. Sales last week were uneventful and it certainly appears as if we will have our second consecutive week of sales substantially lower than slaughter levels.
The majority of hides changing hands last week sold at steady levels; however, there were unconfirmed rumours that packers may have quietly accepted prices a dollar lower on some of their more difficult-to-sell items.
Those expecting packers to offer hides a day early this week due to the holiday were disappointed. The majority of packers appear as if they looking to treat this week like any other week of trading, although we would not be surprised if offers did come out a little earlier than usual tomorrow.
Members of the cowhide trade have similar reports to those in the big packer trade. Producers started out last week looking to hold prices steady, while buyers appeared as if they were looking for price concessions. Sources report that the week got off to a sluggish start and by the middle of the week, there were only a handful of buyers willing to share their price ideas and most were looking for prices $1-$2 lower. A few buyers were more aggressive, submitting bids $3-$5 under asking prices of producers.
The majority of producers continue to insist that they are well sold on HNDC, while there is speculation building in the trade that producers are not as strongly sold on HNC or HBC, especially with the number of cows in the slaughter mix running at the highest levels of the year. This produced a number of unconfirmed rumours of trading at levels below the last reported levels. As it pertains to offers, as expected, most producers appear as if they are willing to wait until tomorrow to publish offers in spite of the holiday for Thanksgiving on Thursday, which will reduce this week to 2.5 or three days of trading.
Many members of the trade suspect producers will welcome the smaller production numbers this week.
There is a growing sentiment in the trade that the sold-forward positions of producers have slowly eroded over the last two or three weeks. As we approach the end of this month, there are a few more producers anxious to obtain bids on some of their less popular hide selections and we would not be shocked if we did saw a slight adjustment in prices in the next week to ten days.
Meanwhile, we will see a substantial reduction in slaughter this week due to the holiday, while keeping in mind we are only four weeks away from the Christmas and New Year Holidays. We look for producers to attempt to play on the emotions of buyers, “talking up” how few cattle will be slaughtered over the course of the next four weeks due to the holidays in an effort to motivate buyers.
Producers are in the midst of attempting to work out the logistics of where they will be shipping hides during the time Asia will be closed because of Chinese New Year (January 28). We are not yet convinced that every producer has plans in place and suspect that buyers with cash and an ability to take deliveries during this timeframe will be able to negotiate prices.
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