US Perspective – 02.10.18
02/10/2018
www.themaxfieldreport.com
Last week in the big packer trade, packers entered the week with offer lists that were similar to the previous week. Sources share that the only noticeable change was that there appeared to be ample offers of heavier weight BRS/HTS. This is due to the fact that live cattle have been backing up for the past two to three weeks, as well as reports that the number of yield grade 4’s and 5’s is increasing considerably.
With regards to asking prices, packers mostly left them unchanged on most selections at the start of the week. This was despite thoughts within the trade that many packers had more loads for sale than they were willing to admit. That being said, many members of the trade were quick to point out that asking prices were around a dollar higher than the trading levels reported in the previous week. In terms of heavier weight hides, sources share that were amply offers of this material on lists, while asking prices were $2-3 lower than in the previous couple of weeks.
As to interest last week, sources claim it was difficult for producers to build up any momentum due to holidays in South Korea and Taiwan, the Lineapelle Fair in Milan and the USHSLA annual meeting. The numbers of bids last week appeared to be in line with the previous week. Buyers remain of the opinion that packers have ample numbers of hides for sale and continue to bid at levels a couple of dollars under asking prices.
With regards to sales, the consensus of the trade is that the number of hides changing hands was not much different than for the previous weeks. Some members of the trade believe it is likely there were more hides that were bid and not booked than the number of hides sold. This is due to buyers and sellers being unable to find common ground on trading levels. Harvest levels reached 650,000 head last week. With speculation that sales were lacklustre, it is very unlikely that packers cleared their production last week.
We were able to round up a couple of reports of trading over the weekend, with sources reporting sales of HNH at $37 and of HBH at $28.
Elsewhere, reports from the cowhide trade claim producers entered last week in possession of offers lists that were as populated, if not more populated, than the previous week. The majority of producers we spoke with said they have simply not seen enough interest in the past few weeks. It appears HBC was the selection in the most trouble, and we are even hearing reports that demand and interest for HNDC has dwindled in the past few weeks. This has resulted in some producers being a bit more aggressive for sales.
As to interest last week, there were similar reports to in the big packer trade, with the combination of holidays in South Korea and Taiwan, the Lineapelle Fair and the USHSLA meeting resulting in a disturbed week of trading. Overall, it is widely agreed that the number of hides sold fell short of the harvest, leading to thoughts that we will likely see producers with large offer lists again this week, especially with the cow harvest still over 130,000 head.
The look ahead
As to our thoughts for this week, we are of the opinion that it could be a very interesting week of trading for both buyers and sellers. We will see Chinse tanners out of the office enjoying their National Day holiday, while tanners appear to have been very disciplined in their purchases. Many continue to insist that they have not seen leather orders develop as they had expected.
In the meantime, US packers continue to insist that they possess decent sold forward positions, while refusing to accept lower trading levels. However, with sales falling short of the harvest on an almost weekly basis, many pundits are questioning how long packers can continue with this strategy moving forward.
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