US Perspective - 01.05.18
01/05/2018
www.themaxfieldreport.com
Reports from members of the big packer trade claim most packers entered last week with offer lists that continued to be well populated. Most of them appeared to be offering a full complement of selections for sale, many for prompt shipment. We are aware of one packer who did not have as many hides for sale last week. Sources share this packer was telling prospective customers that they continued to enjoy a strong sold forward position.
Many packers lowered their asking prices last week, ranging from $1-3, depending on the packer and the selection. We also heard of selections with decreases as high as $5. Packers appeared to be attempting to move asking prices back in line with their last traded levels.
With regards to interest, members of the trade shared that there were a decent number of buyers willing to submit their price ideas in the first half of last week. The downside was that most of the price ideas from buyers were deemed too aggressive to book, so packers attempted to counter. Buyers were reluctant to increase their offers, however, and by the second half of the week it seems they did not book as much business as in the previous few weeks. This led to thoughts that it is unlikely packers cleared their harvest last week.
Trading levels suggest packers were aggressive last week, with rumours of sales at levels of $54-$55 for HTS, $51-$52 for CBS/BRS, $60-$61 for BBS, and around $45-$46 for HBH.
Meanwhile, reports from the wet blue trade claim there were a good number of hides offered last week. Producers are conveying a message that they continue to enjoy decent business. Members of the trade also share that it appears most wet blue producers are running their tanneries at full capacity; this is obviously reducing the number of wet salted hides they have for sale. It is also worth noting that several tanners in Asia have been pursuing wet blue in the past four to six weeks as they seek to avoid taking delivery of end of the winter hides.
We were able to round up a handful of sales from over the weekend. We had a couple of sales on HNS with regular weights at $62 and Jumbos at $68, while sales on BBS check in at $54, $60 for Jumbos.
Elsewhere, reports from the cowhide trade claim that producers entered the week with offer lists that were well populated. A number of producers also had several selections available for prompt shipment. Overall, sources share that there was no shortage of hides offered, with claims several of the producers being interested in volume-type sales.
Most producers opted to leave their asking prices unchanged last week, while a few who had raised their prices a couple of weeks ago after decent sales were reported to have lowered them again, back to the levels of a couple of weeks ago.
With interest last week, sources share that at the start of the week it appeared there were a number of buyers interested in hides, but that their bidding prices were aggressively lower. Sellers reportedly attempted to counter these bids, but most buyers were not enthused about improving their ideas and so quite a bit of interest was withdrawn.
The sentiment of the trade is that it is unlikely producers sold a week’s worth of production, while it appears prices were incrementally lower than their last traded levels.
The look ahead
As to our initial thoughts for this week, much of Asia is celebrating the May Day (Labour Day) Holiday on Tuesday, so it is reasonable to suspect the week will likely get off to a slow start. In the meantime, harvest levels in the US are poised to remain high, especially considering the number of live cattle available to harvest and the fact that packers continue to see decent demand for boxed beef. Last week, they were able to raise prices on one of the larger harvests of the year.
The expectation of most members of the trade is that producers are likely to enter this week undersold and in possession of larger offer lists than they are willing to admit. We continue to hear that producers are dealing with customers who are up to their old tricks of being later opening lines of credit, requesting to delay shipment and, even worse, requesting to renegotiate older, more expensive contracts and/or even requesting to cancel them.
Although there were some decent sales over the course of April, we wonder how many of these contracts are already problematic and how many of the sales reported are of hides that have been sold a second or even third time. Until producers can get themselves into better sold forward positions (not an easy task), and knowing that harvest levels are not going to ease anytime soon, the best thing anyone can do with a production if hides is to continue to sell into this market to reputable buyers.
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