US Perspective - 11.04.17
11/04/2017
www.themaxfieldreport.com
Last week in the big packer trade, most of the packers that published offer lists lowered their price ideas by a couple of dollars from the previous week in order to reflect lower trading levels accepted at the APLF exhibition. However, several members of the trade were quick to point out that, even with this adjustment, most asking prices were still several dollars higher than trading levels accepted during the show.
Overall, sources report that the number of bids last week was disappointing, with the number of buyers willing to share their price ideas well below expectations. It is worth noting that the handful of buyers willing to submit bids had price ideas that were several dollars below the levels traded during APLF. For the most part, these ideas were deemed too aggressive by packers to counter. The consensus among members of the trade was that only a small number of hides changed hands. Reports say that buyers and sellers could not agree on trading levels and that both sides appeared happy to allow the week to come and go with only a handful of sales. Some packers were insisting that they could still conclude business at their last traded levels, while other members of the trade suggested that trading levels were down $1-$2.
Elsewhere, reports from the cowhide trade were similar to those from the big packer trade. Most sources were reporting that producers started the week by lowering their asking prices by a dollar or two. Sources say that producers were disappointed with the number of bids they saw last week, which was certainly below their expectations. The price ideas of most buyers were at levels $2-$3 under the official asking prices of sellers, resulting in a stalemate.
This week, we expect several producers to have offer lists that contain a full complement of selections. It is also likely that we will see shipping times much closer than what has been advertised by some producers. These predictions are supported by last Thursday’s USDA Export Sales report, which showed that outstanding sales of wet-salted hides stood at only 2.5 million hides, a marketing year low. There are also plenty of rumblings that producers are pushing customers to ship product earlier than contracted.
Packers have reduced their slaughter intentions due to a drop in profit margins. However, the long-term forecast is calling for more than ample supplies of live cattle standing and available for slaughter. The announcement that China will soon open its border to US beef will likely provide a boost for packers.
Demand from Asia will be a key factor in the next couple of weeks, especially given that interest from tanners was been well below expectations in recent months. There are quite a few US producers looking for sales this week and it will be interesting to see if buyers or sellers will blink first.
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