US Perspective—19.06.18
19/06/2018
www.themaxfieldreport.com
Last week most packers continued to have a full complement of selections on offer. Despite the large offers, some were reportedly laying claims to now being sold into the month of August. Contradicting these claims were reports that many of the packers were pressing customers to take delivery of their outstanding shipments much earlier than contracted.
Interest the first half of last week as uneventful, especially with packers making their best attempt to try and hold prices steady. However, in the second half of the week packers appeared to have softened their stance and were a bit more willing to negotiate prices, allowing some business to be concluded. Late last week unconfirmed rumours suggested several of the packers were approaching some of “old friends” with “special” offers of HTS at around $46-$47 C&F, BBS at $55-$56 C&F and BRS or CBS offered at $43-$44 C&F.
In the cowhide trade producers also entered last week with offer lists that continue to appear well populated. As to asking prices last week, sources report they were all over the board.
Things got off to a sluggish start, but by the middle of the week, there started to be a few more bids around; however, most of the buyers were targeting substantially lower prices. Producers who made a conscientious effort to conclude a decent volume of business last week had to succumb to lower prices. Producers trying to trade as close as possible to their last traded levels found business more difficult to conclude. Most are calling prices down roughly a dollar with their last traded levels.
We are not aware of any producer who is thrilled with cattle hide market in the first half of 2018. We tend to see harvest levels peak around the July 4, and then slowly ease through September. However, considering the number of cattle standing, strong demand for US beef and packers registering profits that rival telephone numbers, we stand a decent chance of harvest levels continuing at unseasonably high levels.
The one variable left unanswered is leather demand and as we have written a few times, June and July are historically not known as a strong time for leather demand. Most side leather tanners have not seen any improvement and, in fact, there are claims that many continue to see business falling. Business for most upholstery tanners appears decent, but the problem is this segment of the market is about half of the shoe segment.
The other challenge facing those selling hides is that Italy, which has been buying a considerable number of wet blue hides from the US and chilled hides from European suppliers, is starting to move towards “holiday mode” and tanners there will be closed for the entire month of August. In our opinion, this could not come at a worse time, especially for US wet blue hide producers, who have sold close to a million wet blue hides to Italy this year.
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