US Perspective—12.09.17
12/09/2017
www.themaxfieldreport.com
A combination of offers not released until Tuesday night or Wednesday morning owing to the holiday for Labour Day on Monday, and the fact most sellers were insisting on steady prices, resulted in a lacklustre week of sales last week.
According to sources, there were a moderate number of bids to start the week. However, with the majority of buyers looking to buy at prices lower than the last reported levels, sellers attempted to counter, only to discover a number of buyers withdrew their interest, opting to wait another week.
As to the number of hides changing hands last week, we are not aware of many members of the trade laying claims to enjoying a strong week of sales, leading to speculation that it is highly unlikely that packers were able to liquidate even a holiday-shortened week of slaughter last week. In the meantime, as it pertains to trading levels, it appears sales last week were concluded at steady levels to $1 lower than the week prior.
Reports from the cowhide trade last week were not much different. Interest from prospective buyers was limited at best, while price ideas seen from most buyers were at levels lower than the last reported trading levels. As to the number of hides changing hands last week, the consensus of the trade is that it was not a busy week of trading. Reports claim producers were unwilling to negotiate prices, while the sizeable majority of bids seen were lower than the last reported trading levels with buyers unwilling to improve their ideas.
However, it is worth noting, we did speak with a couple of isolated producers who appeared as if they were willing to negotiate prices, trading product last week at $0.50 to $1 lower than the last established trading levels and laying claims to enjoying a moderate to decent week of sales.
We are leaning towards thoughts that sellers are in need of concluding business. Worth noting that over the course of the past six weeks (last week not included), we have seen the slaughter average 633,000 head, while combined sales have only averaged 581,000 hides, thus slowly eroding the sold forward positions of producers. This, coupled with the number of tanners who are “dragging their feet” taking delivery of their older, more expensive contracts, has likely resulted in a situation where we will have some producers interested in concluding business on some of their selections for shipment in the next couple of weeks.
It continues to appear as if we have a situation where we are simply producing more hides than there is demand. Meanwhile, slaughter forecasts are calling for numbers to be close to 650,000 head the next several weeks and higher if packers have the labour. This is why we remain of the opinion we are in a buyer’s market and producers will be best served to continue selling into this market.
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