US Perspective - 27.06.17
27/06/2017
www.themaxfieldreport.com
Last week in the big packer trade, packers started the week with offer lists that were more populated compared to the previous week with a full complement of selections offered. Meanwhile, sources report that asking prices were unchanged compared to the previous week as packers were looking to hold prices steady with the last reported trading level.
Overall, the week got off to a sluggish start with numerous sources sharing that the number of bids was noticeably lower than the previous week, while it appeared buyers who were willing to pay steady levels were in the minority. By the time the second half of the week rolled around, we started to hear rumblings that many traders, and some of the packers, appeared to be softening their posture and were willing to negotiate prices. By the end of the week, the consensus of the trade was that buyers could buy at slightly lower levels, especially if they were flexible with their shipments.
Trading levels heard had sales of regular weight HTS taking place at $68-$69, while sales of BBS reflected levels of $72. Meanwhile, BRS/CBS were reported to be trading at levels of $66-$67, while interest on HNS was reported around $72-$73, as sellers struggled to achieve prices higher than BBS.
In the meantime, the slaughter last week was the largest of the year (632,000 head) and the expectation of pundits is that with more than ample cattle available for slaughter, coupled with packers registering record profits, it is possible we will see an even higher number moving forward.
As to sales reported, we have a handful of sales pending over the weekend. Sales reported are calling BBS $65, while sales on regular weight HTS check in at $62 for packer material and $59 for processors. Super-Jumbo HTS (74 min) were sold at $70.
In the cowhide trade, sources report that the week started out with producers continuing to claim strong sold forward positions, while appearing as if they had momentum on their side. For the most part, offer lists appeared unchanged compared to the previous week, while a handful of producers were asking incrementally higher prices on HBC. Like for big packer hides, the week got off to a sluggish start. By the second half of the week, inquiries/interest picked up and it appears producers were able to liquidate a moderate number of hides at what appears to be steady to incrementally higher trading levels. There are mixed opinions about whether producers were able to sell their entire week of production; the consensus is that producers sold enough to encourage them to keep prices steady again this week.
As to some initial thoughts for this week, we are leaning towards the opinion that producers in the big packer trade have slowly seen their sold forward positions eroded over the past 2-3 weeks and that many packers enter the week a little bit more aggressive for sales. We continue to hear reports of some packers pressing customers to increase the number of hides they are shipping, leading us to suspect there is a reasonable chance we will see a few offers this week for prompt shipment.
In other news, producers of wet blue hides continue to push for sales and we have seen a couple of the largest producers travelling in Europe in the past couple of weeks. We continue to hear that there are more than ample offers, with many selections appearing as if they are for prompt shipment.
Looking ahead to the remainder of the week, we are leaning towards thoughts that efforts to obtain higher prices by packers have likely fallen by the wayside. We suspect packers may be hard-pressed to duplicate sales this week at steady levels, especially with rumblings that traders were much more aggressive last week, while a couple of the packers are accused of trading at slightly lower levels. Processors appear to be in much better shape than packers. With it appearing as if they still have momentum on their side, we look for trading levels to be no worse than steady, while we would not be shocked if producers were able to obtain some incremental prices increases.
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