US Perspective - 22.8.17
22/08/2017
Packers saw a decent amount of interest last week with a decent number of hides sold. They appear as if they “drew a line in the sand”, refusing to pursue bids at prices lower than their last traded levels. As a result, when the USDA Export Sales Report is released this Thursday, we expect to see one of the larger sales weeks of the year, which allowed packers to stabilise prices.
As to trading levels, sources report HTS were sold at levels around $50 FOB at the start of the week and traded as highs as $52 toward the end of the week, until packers deemed they had sold enough, withdrawing their offers.
Trading levels on BBS reflect levels of $55 early in the week and as high as $57 late in the week, while trading on CBS were $52-$53 and HNS ranged from $61 to $62.
Slaughter levels continue well above levels of a year ago with last week’s slaughter 32,000 head or 5.3% higher. This trend is expected to continue through the next months, especially with packers registering profits and more than ample supplies of live cattle available to slaughter.
Reports from the cowhide trade are similar to those in the big packer trade. The week started out with buyers trying to bid prices lower; however, producers appeared as if they had had enough of lower prices and insisted on steady to slightly higher trading levels.
Sales at the start of the week were slow, but had picked up by mid-week. A decent number of hides exchanged hands, so it is likely we will see fewer offers this week.
THE LOOK AHEAD
It appears that producers have been able to conclude a decent number of sales the last week to 10 days. This, coupled with many traveling in Asia, is likely to make offers difficult to come by. Those buyers who had interest in some of the “special” offers by producers are likely to be disappointed as these appear to have disappeared.
Although producers have enjoyed some decent business, we believe they will have trouble raising prices because shipments are still well below normal levels. Although most producers enjoy strong sold-forward positions, it will take a noticeable improvement by customers to ship their outstanding orders before we can see any appreciable improvement in prices.
We suspect we will see smaller offer lists by those traveling and would not be surprised if some producers withdraw their offers to see the reaction of buyers, as several producers believe there are some tanners with inventories lower than normal.
We think the lowest prices of the year have occurred and it will be interesting to see how things play out the next couple of weeks.
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