US Perspective - 07.11.17
07/11/2017
www.themaxfieldreport.com
Reports from members of the big packer trade claim packers started the week with offers unchanged from the previous couple of weeks. In the meantime, a number of pundits suspected that some packers had a few more hides for sale than they were willing to admit due to poorer than expected sales in the past few weeks.
With regards to interest last week, it appears the week started off with a few more inquiries/bids than the previous week. As the week progressed, we heard numerous reports of sellers claiming a noticeable improvement in the number of bids they received. Sources share that the sellers were pleased that the bids appeared to be coming from several different countries.
As a result, popular opinion of the trade is that there were a decent number of hides changing hands last week, with sales easily exceeding the past couple of weeks. However, opinions are mixed as to whether or not we cleared the weekly production, especially with harvest levels moving back up over the 640,000 mark.
With regards to trading levels, the consensus of the trade is that prices were certainly no worse than steady with last week. Attempts to bring prices lower were met with a considerable amount of resistance from packers. Meanwhile, numerous sources have shared that the majority of hides that were traded sold closer to the top end of the trading range, especially towards the end of the week.
Members of the cowhide trade report that offers last week were mostly in line with the past couple of weeks, while the only adjustments seen were producers lowering their asking prices by around $1. Popular opinion of the trade was that offer lists were fairly populated. In fact, there was a considerable amount of speculation that several producers had more hides for sale than they were willing to admit.
Overall, interest continued to follow the trend of the past few weeks, leaving most members of the trade of the opinion that producers saw yet another week of sales that fell short of production. The challenge facing those selling hides is that the number of cows in the harvest mix is running at its highest level of the year. This means a number of producers are carrying larger inventories of unsold hides than they are willing to admit.
With regards to trading levels, prices were down between $0.50 and $1, while there were plenty of unconfirmed rumours of direct business concluded at even lower levels than this.
The look ahead
As to our initial thoughts for this week, we look for packers to enter the week with a little bit of confidence on the back of what most members of the trade are calling a decent week of sales. We are likely to see an improvement in this Thursday’s USDA Export Sales Report. We will be particularly interested in how follow-up interest is this week.
In addition, we would suspect that, after such a decent week of sales last week, there will be some adjustments on the offer lists of packers, whether that be some selections not offered or shipping times on new business being moved further into the future.
With regards to the possibility of higher prices this week, we understand that producers have grown tired of the pressure on prices and are anxious for higher trading levels. However, in order to raise prices, we will need to see two things: sustained interest from tanners; and sustained shipments that are much closer to harvest levels than we have been seeing in the past few months.
In our opinion, until these two things come to fruition, we continue to believe that sellers will have their work cut out for them if they try to raise prices too quickly, especially if harvest levels continue anywhere close to last week’s levels.
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