US Perspective—25.07.17
25/07/2017
www.themaxfieldreport.com
Reports from the big packer trade are calling last week a mixed bag for packers and traders. Some opted to be more aggressive in the second half of week and were willing to negotiate prices. This appears to have resulted in some decent volumes being traded, but at trading levels well below their “official” asking prices at the start of the week. In the meantime, traders and packers who were not as aggressive appear as if they had a rather lacklustre week, concluding minimal sales at best.
Rumours suggest regular weight HTS could be bought in volume at $62-$63 C&F, while BRS were bought close to levels of $62 C&F. Meanwhile, BBS were trading at levels close to $65 C&F, while interest on HNS was at $65-$66 C&F and CBS at $60-$61 C&F. Sales of Jumbo BRS and HTS were close to levels of $70 C&F, while trading on Super-Jumbo HTS and BRS reflected levels of $72-$73 C&F.
In spite of possessing decent sold-forward positions last week, producers in the cowhide trade appeared as if they were experiencing “sympathy” pressure from the big packer market. This, coupled with the number of cows in the slaughter mix continuing to run at levels 6%-8% higher than a year ago, has producers acknowledging the best thing they can do is to sell into this market. As a result, several producers appeared a bit more willing to negotiate prices last week; however, buyers thinking that they would pass bids substantially lower than asking prices, like some buyers in the big packer market, found the majority of producers unwilling to consider such decreases.
It will be interesting to see the next offer lists of packers who were much more aggressive last week. Elsewhere, we continue to hear there are plenty of unsold hides in Europe, and wet blue and crust unsold in Brazil and this overhang of unsold material will weigh on the market as well. In the meantime, slaughter levels do not appear as if they will ease; the next break for those selling hides will be in seven weeks when the Labor Day Holiday and the end of summer occurs. We are not aware of anyone touting that the leather business is strong, while many sources continue to insist that tanners are purposely delaying “ramping-up” for their upcoming busy season. Tanners cite that they are not confident of leather orders and there appears to be more than ample availability of supplies, resulting in most tanners having no sense of urgency. Considering the above, we are producing some of the best quality hides of the year and considering current trading levels, one would think that sometime in the immediate future that we would start to see some “savvy” tanners start to restock their supplies of raw material in anticipation of the busy season. The problem for those selling hides is it has not yet come to fruition.
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