US Perspective—22.05.18
22/05/2018
www.themaxfieldreport.com
Packers entered last week with offer lists that were well populated. There were numerous selections offered for prompt shipment, while shipping timeframes on a couple of the more popular selections moved out a bit further, which was met with a considerable amount of scepticism from most pundits.
Most packers appeared content to leave asking prices unchanged with the week prior, despite widespread knowledge that actual trading levels took place the week prior at levels lower than asking prices. There were a couple of packers who did lower their asking prices by $1-$2 last week, depending on the selections, which was interpreted as sellers trying to align asking prices closer to actual trading levels.
Sources report there appeared to be a bit of guarded optimism among packers as they enjoyed a decent amount of interest the week prior. The interest also appeared broad based, coming in from buyers from several different countries. However, as last week progressed, the number of bids were noticeably fewer, while price ideas from buyers were once again several dollars under the asking prices of packers.
It is highly unlikely that packers cleared their production last week (largest harvest of the year), while the hides changing hands sold at levels $1-$2 lower than the prior week.
Elsewhere, reports from the cowhide trade claim producers entered last week with offer lists that were fairly populated again. The week got off to a much slower start than expected, especially with most producers confirming they saw some decent interest the week before. By the middle of the week, things had not improved and late last week, it was clear than the number of bids were falling well short of the week prior.
Overall, the sentiment of the trade is there was not enough business concluded last week to allow producers to clear their production, especially considering the number of cows in the harvest mix is not exhibiting any signs of slowing (we saw 129,000 head last week). As to trading levels last week, sources share the few opportunities to conclude business saw producers forced to succumb once again to lower trading levels or risk losing the bid, leading to reports of sales at a $1-$2 lower than the week prior, depending on the selection and the producer.
We are looking for another huge harvest this week, on the heels of packers registering what most pundits are calling record margins. In addition, we have a holiday next Monday here in the United States (Memorial Day) and this Saturday and next Saturday will be the only chance for packers to “replace” this production. With beef demand exceeding expectations and huge profits, we are likely to see this week exceed last week’s total.
Offer lists this week are likely to reflect large quantities of hides for sale and for many producers to have several selections available for prompt shipment.
Those still looking or hoping for leather orders to improve are likely to be disappointed as historically, this is not the time of the year when we see orders increases.
Over the course of the past several months we have been writing about a market that is over-supplied, as demand is simply not enough to keep pace. Now, with summer harvest numbers upon us and producers undersold, we believe producers are in for miserable months in June and July. For their sake, let’s hope we are wrong.
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