US Perspective—20.12.16
20/12/2016
www.themaxfieldreport.com
Last week saw packers step up their efforts to stem the decline in prices and popular opinion is that trading levels for the most part last week were roughly steady to only a fraction lower, depending on the selection. A couple of the packers were laying claims to having sold a decent number of hides last week; however, many tanners in Asia are refuting this information, leading to speculation that if there were some decent sales it may have been concluded with traders.
Hide weights continue to run heavy. Late last week much of the Northern Plains was dealt some brutally cold Arctic air, coupled with snow and with early forecasts calling for temperatures into the 40 degrees Fahrenheit by the middle of the week, cattle will be coming to slaughter full of mud and manure.
As to trading levels last week, popular opinion of the trade is that packers made their best efforts to hold prices steady and depending on the packer and the selection, we are aware of some success stories. In the meantime, unpopular selections traded anywhere from fifty cents to a dollar lower last week, also depending on the packer and the selection. In regards to how many hides changed hands, opinions are mixed; however, it appears the consensus of the trade is that it is rather unlikely that packers were able to sell a week’s worth of production last week.
Meanwhile, reports from the cowhide trade claimed interest slowed last week, as several sources shared they did not enjoy as many bids as the previous couple of weeks. Overall, it appeared producers entered the week with a mindset to do their best to hold prices in line with the week prior, while buyers willing to share their ideas, had price points several dollars under the last traded levels.
Popular opinion amongst pundits is that with buyers’ and sellers’ ideas so far apart, there were not many hides changing hands last week and it is unlikely that producers sold their production. In terms of prices, most sources are calling HNDC fully steady, while trading on HNC were too light to determine a market and trading on HBC reflected levels roughly fifty cents lower than the last reported levels.
As to our initial ideas for this week, we tend to believe that producers are looking at last week are a moral victory, as they were able to slow the momentum of buyers, which prevented any substantial reduction in prices.
Most members of the trade lean towards thoughts that producers did not clear their production last week. However, with slaughter levels likely to fall well below 600,000 head this week and early forecast for next week calling for 510,000 head, we tend to believe that producers appear willing to “roll the dice” and believe that they will see some decent interest from tanners for hides to deliver following Chinese New Year in late January.
We are somewhat impressed by shipments these past several weeks; it appears for the most part that shipments have been moving on schedule, with buyers opening letters of credit on time and few if any requests to delay shipment. We tend to interpret this as buyers likely having better business than they are willing to admit. We are hearing from reliable sources there are a number of Asian tanners who are willing to be a bit more “flexible” on shipments prior to Chinese New Year. This leads us to believe that there is a very good likelihood we will see some decent demand for hides in the early part of 2017.
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