US Perspective - 04.07.17
04/07/2017
www.themaxfieldreport.com
Reports from the big packer trade say that packers started last week with intentions to hold prices steady, opting to leave offer lists unchanged. This came in spite of opinions that the majority of offer lists were fairly well populated. Inquiries/interest at the start of the week was reported to be sluggish and by the middle of the week we started to see signs that some packers were a little more willing to negotiate prices. The second half of the week saw several traders and packers being more aggressive in the market place, leading to rumblings of special offers for what appeared to be for relatively prompt shipment. Rumours started swirling of direct business by some of the packers at prices $1-2 lower than the previous week and by the end of the week the consensus of the trade was that packers’ prices were off by $1-2.
As to the number of hides changing hides last week, popular opinion of the trade is that it was a sluggish week of trading. Several sources shared that they did not sell as many hides as in the previous week. Interest for wet blue hides was not nearly as brisk as in the past two to three weeks, which saw decent sales due to representatives travelling. This is leading to thoughts that combined sales on Friday’s USDA export sales report are likely to be lower than in the previous week.
Elsewhere, reports from the cowhide trade said producers entered the week continuing to insist that they possessed strong sold forward positions. However, the recent increase in the slaughter, coupled with sales that have been far from stellar, was leading to thoughts that many producers were watching their positions slowly erode. Supporting these thoughts were comments from members of the trade that producers were not as quick to counter when presented with bids this week and took more time to respond. Popular opinion of the trade is that this is because they wanted to shop around bids, while they were also recognising the weakness in the big packer market and trying to determine if the cowhide market would experience any sympathy pressure.
Sources report that interest was noticeably lower last week, while the majority of buyers who were willing to share their price ideas were looking to buy hides at slightly lower levels. The consensus of the trade is that the upswing we had been seeing in cowhide prices appears to have peaked and we will have to see if cowhide prices follow big packer hides lower. The sentiment of the trade is that, for the most part, prices last week were unchanged from the previous week.
With regards to the number of hides changing hands last week, the trade appears to agree that it is unlikely producers were able to liquidate their production. This is leading to thoughts that we will likely see offer lists a bit more populated this week. It will be interesting to see how committed producers are to holding prices steady.
As to a few initial thoughts for this week as we start the second half of 2017, we are looking for offer lists to be more populated than last week, although perhaps not as much for producers of cowhides. As to asking prices this week, we lean towards the opinion that packers face a difficult decision; do they finally relent and lower asking prices to reflect levels closer to where most traded last week; or do they leave asking prices alone and attempt to counter bids once they come in?
In the meantime, there continues to be a sizeable overhang of unsold wet blue hides in the market and these will also continue to weigh on the market. The good news for those selling hides this week is that they will have a one week reprieve from the slaughter due to the Fourth of July holiday.
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