US Perspective - 6.2.18
06/02/2018
www.themaxfieldreport.com
Last week in the big packer trade started with packers opting to repeat their offers from the previous couple of weeks. Sources shared that offers of regular weight HTS were non-existent, while offers of regular weight BRS were minimal. In the meantime, asking prices were unchanged with the previous week, while thoughts that packers would likely have more loads for sale last week following a sluggish week of sales the previous week did not come to fruition.
As to interest last week, the sentiment of the trade was that they were disappointed with the number of bids. A large number of buyers willing to share their price ideas appeared to be targeting lower prices. As the week progressed, packers refused to negotiate, insisting on obtaining full asking prices, leading to thoughts it is highly unlikely that packers cleared their weekly production last week. As it pertains to trading levels, we are calling prices steady, in spite of widespread speculation that packers are slowly accruing unsold inventory.
In other news, reports from the cowhide trade claim a number of producers entered the week with more than ample supplies of unsold hides. As to offer lists last week, offers from producers were mixed, as some producers opted to keep their offer lists unchanged with the previous week and chose to try to counter bids as they came in. Meanwhile, other producers decided to reduce their asking prices closer to trading levels from the previous week.
As to interest last week, sources report the week got off to a slow start, as buyers were reluctant to appear as if they were interested. The few buyers willing to pass on their ideas were targeting prices lower than the last reported trading level.
As the week progressed, producers appeared willing to negotiate prices. However, with a sizeable number of buyers bidding aggressively lower, popular opinion of the trade is that the business concluded was at moderately lower levels. The number of hides changing hands was limited and it is highly unlikely that producers cleared their production last week.
The look ahead
As to our thoughts for this week, with the Chinese New Year pending, we are going to call this week ‘last chance week’. We suspect there will be some buyers looking to buy a few hides before departing for their Lunar New Year celebrations at the end of the week, while, more importantly in our opinion, producers looking to conclude some business may be a bit more inclined to negotiate prices.
In the meantime, we are still waiting to hear reports that leather business is improving for tanners. Based on the conversations we have had with various members of the trade from many different parts of the world, inquiries/interest from tanners in Asia is still very slow to develop. This is leaving many members of the trade wondering if this year’s busy season will be one of the shortest we have seen in a long time.
Meanwhile, producers did catch a bit of a break with USDA announcing that they overstated last week’s harvest, reducing the number of cattle scheduled to be harvested on Saturday by 18,000 head and reducing last week’s total to 611,000 head. However, this is still 15,000 head higher than last year. With popular opinion of the trade that several producers have more hides for sale than they are willing to admit, any number higher than a year ago would be considered a hindrance.
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