US Perspective - 23.1.18
23/01/2018
www.themaxfieldreport.com
Last week in the big packer trade, packers entered the week buoyed by confidence after seeing an improvement in interest in the second half of the previous week. This led to thoughts that they would see some decent follow up. The week started with packers publishing offers lists that were, for the most part, a carbon copy of the past few weeks. It is worth noting, however, that we heard from several sources who reported that many packers had a few more loads to offer.
The week got off to a very sluggish start. By the middle of the week, most sources were calling interest lacklustre, while the few buyers exhibiting some interest appeared to be not quite prepared to pay packers’ full asking prices. By the time we reached Friday afternoon, the majority of sources we spoke with reported they were disappointed with interest last week. In addition, the consensus of the trade was that packers were willing to negotiate prices. Popular opinion is that packers failed to liquidate their production last week.
With regards to trading levels last week, the majority of sources said prices were unchanged. It is worth noting that we did not hear of any sales towards the top-end of the trading range (such as BBS at $65, BS at $55 and HNS at $67). In fact, it appears the lion’s share of sales reported were closer to the bottom end of the trading range (BBS at $63-$63.50, CBS at $53-$53.50, HTS at $53-$54 and HNS at $66).
Elsewhere, in the cowhide trade, sources report producers started the week with offer lists in line with the past few weeks. Meanwhile, most members of the cowhide trade were leaning towards the opinion that several producers had a few more hides for sale than they were willing to admit. This led to speculation that some producers might be a bit more inclined to negotiating prices.
As to interest last week, most producers were disappointed by the lack of interest, while the few buyers willing to share their prices ideas were taking dead-aim at aggressively lower prices and bidding prices anywhere from $2 to $4 lower.
With regards to trading last week, popular opinion of pundits is that producers made their best efforts to negotiate prices, while trying to avoid succumbing to too large of a discount. This led to thoughts that sales last week took place at levels $1-$2 lower than the last reported trading levels. As to volumes sold, it is unlikely that producers sold a week’s worth of production.
The look ahead
As to our thoughts for this week, we tend to agree with other members of the trade that it is very likely that packers have a few more hides for sale than they are willing to admit. In the meantime, although packers are receiving a bit of a reprieve as a result of a slow start to the harvest caused by winter storm Jaxon, we look for packers to pick back up right where they left off. It is likely we will continue to see harvest levels that are 35,000-40,000 higher than a year ago.
In the meantime, the trade continues to try to ascertain how leather business is for tanners in Asia. The lack of tanners who are pressing packers for shipment makes us think it is unlikely leather orders are higher than a year ago.
We remain of the opinion that we are in a supply-driven market. Until we see either a drop in supply or an improvement in demand those selling hides will continue to have their work cut out for them.
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