US Perspective – 20.11.18
20/11/2018
www.themaxfieldreport.com
Reports from members of the big packer trade claim that, as expected, the offer lists from many of the major packers were more populated last week. The majority of hides offered were selections of Jumbo/Super-Jumbo hides. There also continued to be ample offers of HNS. The number of wet blue selections appeared to have increased last week, on the heels of reports that interest and demand for wet blue hides has decreased substantially this quarter, falling well short of weekly production in numerous weeks.
As to interest last week, the majority of people we spoke with shared that although they had bids to evaluate last week, there were not as many as in the previous week. Unfortunately for those selling hides, we are not aware of anyone boasting of having experienced a busy week of trading. As to bids last week, sources claim that interested parties continued to bid prices lower. Some buyers showed some reasonable price ideas, down $1-2, while bidding levels from other prospective buyers were much more aggressive and looked for a substantial reduction in prices.
Overall, it is likely that the number of hides changing hands last week again fell short of the harvest, leading to thoughts that offers lists will be even more populated this week. Trading levels were a soft-steady at best, while it appears the majority of hides traded at least a dollar under their last reported trading levels.
There were rumours that various packers were quietly offering to some of their “old friends”. If sources are correct, some of the offers were easily $2-3 below the official asking prices issues by packers. It is worth noting that there were also rumours late Friday afternoon that a packer had reported to one of the reporting services that they had accepted prices that were $2-3 lower than the last reported trading levels.
Elsewhere, reports from the cowhide trade were not much different from what we have been sharing the past few weeks. Most producers entered the week in possession of offer lists that were slightly more populated than the previous week. It appeared most producers opted to leave asking prices unchanged, refusing to trade any lower.
As to interest last week, it does not appear that there were as many bids as in the previous week. It should be noted however that we are not aware of anyone claiming that the previous week was a busy one in terms of trading. Buyers willing to share their price ideas last week were looking to push prices lower, while obtaining bids of any kind of volume was a difficult task.
With regards to sales last week, the number of hides changing hides was likely not enough to allow producers to liquidate their production. Most sales were concluded at levels roughly a dollar lower than the last reported trading levels.
The look ahead
As to our thoughts for this week, considering that we will observe the Thanksgiving holiday on Thursday and with popular opinion of the trade being that a number of producers have ample supplies of unsold hides, we suspect we will see plenty of hides offered early in the week. In the meantime, producers will get a much-needed break this week on the harvest as a result of the holiday. We suspect this will be short-lived however, as packers continue to rack up lucrative profits. We look for large harvest numbers to return next week and to continue up to Christmas.
There were plenty of rumblings that some packers were much more aggressive in the second half of last week. If there is any truth in these rumours, it is likely we will see this continue this week. The challenge for producers is that there is simply not enough leather business to absorb all the hides being produced. Until we see a substantial improvement in leather orders (doubtful), there may need to be some uncomfortable discussions over the next few months in order to address the sizeable overhang of hides that are being produced every week.
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