US Perspective – 25.09.18
25/09/2018
www.themaxfieldreport.com
Reports from members of the trade claim packers entered last week in possession of offer lists that appeared to be a carbon copy of the previous week. Sources shared that both the number of selections offered and the load counts were similar to the previous week. Asking prices were also unchanged.
As to interest, we heard from a number of sources that they saw a decent number of bids early in the week. However, many of the buyers willing to share their price ideas had ideas well below the levels that packers were viewing in the market. That being said, packers countered these early-week bids at prices a dollar under the asking prices. Unfortunately, buyers did not appear to be too interested in the counters received and many buyers simply decided to withdraw their interest. Most appear to be under the impression that the market continues to remain under pressure.
With regards to trading last week, packers appeared united in their efforts to hold prices as close to steady with the last traded levels. These efforts were met with considerable resistance from prospective buyers. In the meantime, the business that was concluded last week was for minimal quantities. With harvest levels ramping up to 657,000 head last week, it is unlikely packers cleared their production. This means we are likely to see more hides for sale this week.
In other news, there were plenty of rumours of packers offering direct to tanners at trading levels dollars under those they were advertising to others. This generated plenty of talk among members of the trade that on some selections there could be a wide range of trading levels, depending on the packer, the number of hides bought and when they can ship.
Elsewhere, reports from the cowhide trade claim that, as expected, producers entered last week in possession of offer lists that were a bit more populated than the previous week. There were more selections offered and the load counts were larger. In terms of asking prices, they ranged from unchanged to a dollar lower compared to the week before, especially for HBC selections.
As to interest last week, reports from various members of the trade claim the number of bids seen was disappointing, especially considering that a number of producers are believed to be carrying ample quantities of unsold hides in inventory. With regards to bids, it appears buyers sensed producers needed sales, especially on HBC, and the few who were willing to share their price ideas looked to be testing the will of sellers by bidding aggressively lower.
Overall, popular opinion is that buyers and sellers struggled to find common ground on prices last week, resulting in only a limited amount of business being concluded, and for minimal quantities. As to trading levels, popular opinion of the trade is that most business was concluded at levels roughly a dollar lower than the previous week. A few isolated sales are rumoured to have taken place at larger discounts.
The look ahead
As to our thoughts for this week, it is very possible there could be a bit of disconnect in the hide trade. We will see some members of the US trade gather in Chicago on Wednesday and Thursday this week for the USHSLA annual meetings. We will see the last major fair of the year take place, Lineapelle, which will be held from September 25-27 in Milan. This is also the last week of the third quarter. In addition, it will be interesting to see if there is any interest from Chinese tanners this week as most will be out of the office observing their National Day Holi-day from October 1-7.
In other news, we anticipate that harvest levels will not ease. Monday’s number was higher than last week. Meanwhile, last Friday’s Cattle on Feed report continues to show cattle inven-tories exceeding 11 million head of cattle. This, coupled with better than expected beef de-mand, is resulting in lucrative profits for packers and the likelihood we will continue to see numbers well above last year.
Meanwhile, a growing number of pundits are of the opinion that packers are playing a danger-ous game with their hide inventories. The sentiment of the trade is many packers have not been keeping pace with the harvest and this, coupled with leather demand that continues to fall short of levels of a year ago, means a number of packers are likely holding larger amounts of unsold material than they are willing to admit.
At the end of the day, our opinion of the market remains unchanged; if we were a producer, we would be looking to sell into this market. Until we see either a substantial reduction in the number of head being harvested or a sizeable improvement in demand for hides, those selling hides will continue to have their work cut out for them.
Share this story:
