US Perspective—13.12.16
13/12/2016
www.themaxfieldreport.com
Last week in the big packer trade, packers started with offer lists that closely resembled the week prior’s, while asking prices were steady to a dollar lower, depending on the packers and the selection. As the week progressed, there were certainly numerous rumours accusing some of the various packers and traders of being more aggressive when attempting to conclude business, which only provided an additional fuel source for rumours last week.
Some sources are claiming they are aware of some voluminous-type business concluded by packers direct to tanners at what is believed to be at least a couple of dollars (perhaps more) under the “official” trading levels being quoted by packers. In the meantime, other sources were sharing that ideas between buyers and sellers were too far apart and common ground could not be reached. It will certainly be interesting to see how many hides are listed on this Thursday’s USDA Export Sales Report.
Most pundits were of the opinion that most selections traded anywhere from steady to a dollar lower, with the consensus of the trade that sales at steady rates were not easy to obtain. Meanwhile, there are also reports of some selections, primarily heavier-weight steer hides, trading in a range of $2-$3 lower. Also worth noting, there are rumblings that there was a fair number of wet blue hides sold last week and it will be interesting to see what Thursday’s report has to say.
Reports from the cowhide trade claim that producers started the week with offer lists that were not as populated as the week prior, with some producers not offering certain selections. In the meantime, as it pertains to asking prices, most producers opted to hold prices steady with the week prior, in spite of speculation by some members of the trade that producers are not as well sold on HNC or HBC as they are on HNDC. The number of cows in the slaughter mix continues at extremely high levels, as last week’s slaughter at 128,000 head is the largest of the year and popular opinion amongst a number of industry experts is that the numbers will not ease until later next month.
As to sales last week, the sentiment of the trade is that things were not as busy as the week prior. With regard to trading levels, sales on HNDC were steady, while sales on HNC and HBC were roughly a dollar lower. In the meantime, there are unconfirmed rumours that some producers were forced to take even less than this as they were looking for quicker shipment, coupled with thoughts that many producers have some unsold inventory of these selections.
As to our initial thoughts for this week, this is the last full week of trading of the year, as the next two weeks we will observe the Christmas and New Year holidays. That said, with the holidays rapidly approaching and most members of the trade moving into “holiday mode” and busy tending to year-end activities, it will be interesting to see if buyers continue to follow up with additional purchases this week, especially considering the past couple of weeks have seen some decent interest.
In the meantime, the last few shipments to Asia that will arrive before the Chinese New Year will be loading in the first half of this week. It is not yet certain if producers have everything in order to be able to withstand not being able to ship to Asia for the next two weeks or so. We tend to lean with other members of the trade that there may still be some bargains on certain selections if the buyer is “flexible” with shipments. We remain of the opinion that sellers should consider selling into this market, in spite of the fact we will see a couple of smaller slaughter weeks next week and the week after. That said, we believe that once we get past the holidays slaughter levels are likely to return to 600,000 head on a weekly basis.
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