US Perspective – 03.07.18
03/07/2018
www.themaxfieldreport.com
Last week in the big packer trade, most packers entered the week in possession of sizeable offer lists, both in terms of the number of selections offered and the number of loads for sale. Many packers offered a full complement of selections, many of which were available for prompt shipment. As to asking prices, some packers started last week by lowering their ideas by a dollar, while others reportedly lowered them by $2-3, depending on the selection.
With regards to interest last week, the week got off to a sluggish start, with most sources reporting just a few isolated bids. However, by the middle of the week it became clear that some packers and several traders had become much more aggressive. This led to thoughts that there were a fair number of hides changing hands last week at prices $2-3 lower.
Elsewhere, producers of wet blue continue to labour to sell a week’s worth of production due to the main buyers of US wet blue hides, tanners in Italy, being absent from the market as they gear up for their annual summer holidays. This means they have been much less active for the past two to three weeks. Opinions are mixed as to whether packers sold a week’s worth of production last week. We must keep in mind that this is not the easiest of tasks given that packers are harvesting around 650,000 head every week.
Meanwhile, members of the cowhide trade claim that producers entered last week in possession of large offer lists. A number of selections were available for sale in high volume and for prompt shipment. As to asking prices, sources report they were all over the boards. Some producers appear to have grown tired of lowering their prices every week and have decided to leave prices alone and counter bids when they are placed. Some other producers were reported to have lowered their price ideas by $1-2, depending on the selection.
As to interest last week, things got off to an uneventful start. However, by the middle of the week we were hearing reports that some of the more astute cowhide buyers were bidding for larger volumes than they had previously been seeking. In addition, we heard of a couple of traders from the big packer market stepping into the cowhide market last week, perhaps an indication that we are close to seeing the bottom of the market. A fair numbers of hides changed hands at levels steady to slightly lower.
The look ahead
As to our thoughts for this week, we are looking for most packers to continue to have well-populated offer lists. We suspect there are still a number of selections that packers would like to sell for prompt shipment. The good news for packers is that with the holiday pending on Wednesday they will get a one-week reprieve on large harvest numbers.
We do not anticipate that the Fourth of July holiday will wreak havoc with offers or sales this week. However, we believe it will challenge shipments, which could lead to one of our smaller shipping weeks. There are thoughts that the downward pressure in the cowhide trade is starting to ease. We will have to see how follow-up interest is this week.
For now, our opinion of the market has not changed as we have not seen any change in the fundamentals of the market. Until we see a substantial improvement in demand from tanners, it is likely those with hides to sell every day or every week will struggle. We believe the best strategy is to continue selling into this market.
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