US Perspective - 6.3.18
06/03/2018
www.themaxfieldreport.com
Last week in the big packer trade started with packers’ offers list a bit more populated. There were reports that most packers had a full complement of selections, including regular weight HTS. One of the packers who had not offered for a number of weeks was also reported to have a few selections on their offer sheet. Overall, the sentiment of the trade entering the week was that packers had more hides for sale than they were willing to admit. However, as the week progressed packers did not appear to be panicking for sales.
Packers started last week with prices unchanged from the previous few weeks. Sources reported there were a number of traders with offers a couple of dollars lower than the asking prices posted by packers. In some instances, offers were even lower. With regards to interest/bids last week, sources report there were more bids in the marketplace than in the previous two or three weeks. They were quick to point out, however, that the number of bids still fell well short of a normal week of trading.
Sources report that as the week progressed packers appeared to begrudgingly acknowledge that they would have to negotiate prices if they wanted to trade any hides. By the end of the week, packers willing to accept slightly lower trading levels were likely able to register one of their better sales weeks of 2018. Popular opinion of pundits is that it is unlikely that packers cleared the harvest.
Trading levels last week included sales of HNS ranging from $64-$66, while trading on BBS ranged from $60-$61.50. Sales on regular weight HTS hovered around the $52-$54 range, but there were rumours one packer did some direct business at levels closer to $50. Other trading was calling regular weight BRS at $51, while sales on CBS were registered at $52 earlier in the week and $50 by Friday. Trading on heifers was as high as $55 and as low as $51, while trading on HBH checked in at $45.
Elsewhere, reports from the cowhide trade claim most sellers entered last week with weak sold forward positions. Popular opinion is that most producers were looking for volume business last week. As to offer lists, sources report most sellers appeared to have fairly populated offer lists, with most containing a full complement of selections.
With regards to asking prices, most producers opted to leave them unchanged. They were thought to be reluctant to lower their price ideas for fear that it would encourage prospective buyers to further lower their prices ideas.
Sources share that interest last week was better than in recent weeks. By the end of the week, however, consensus of the trade was that it did not measure up to a normal week of interest. Most sources reported that prices were down by at least a dollar, with many selections down at least a couple of dollars. Some were even lower than this.
Trading levels last week had HNDC at $40 early in the week and down to $39 by the end of the week. Trading on HNC saw sales at $32 early in the week, down to $30 by the end of the week. HBC continued to be the problem for most producers, resulting in reports of trading at $23 for material in the north and $21 in the south. There were rumours of even lower levels, but we could not confirm this.
Overall, popular opinion of the trade is that sellers may have enjoyed one of their better trading weeks of the year. We are not aware of any member of the trade who believes producers were able to liquidate their production last week, especially as harvest levels continue to run at 7% higher than a year ago.
The look ahead
We have started out on another week of trading and popular opinion of the trade is that producers enter this with their weakest sold forward positions of the year. We are aware of a number of people who were already in Asia over the weekend and who will be travelling this week. It will be interesting to gauge their activities; the sentiment of the trade is that it is very likely we will hear about a number of “special” offers this week.
We are also very interested to hear reports from those traveling in Asia this week ahead of the start of the APLF exhibition in Hong Kong (March 14-16). We are interested to hear their perceptions of the raw stock inventory of tanners as well as of how many of their drums appear to be turning. We are also interested to hear comments from members of the trade about leather orders. Next week’s fair may offer at least some insight into what we can expect in the second quarter of the year.
As to offers this week, we expect it to be hit-and-miss due to the number of people travelling. However, as previously mentioned, we are of the opinion that there are ample offers of unsold hides. We suspect that some of the hides bought over the next couple of weeks may be able to ship before the end of the month. That being said, we remain of the opinion that the market is facing underlying pressure; in this situation, your first sale will likely be your best sale.
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