US Perspective - 27.11.18
27/11/2018
www.themaxfieldreport.com
Reports from the big packer trade claim packers entered last week in possession of offer lists that had even more hides for sale than in the previous week. Sources shared that there were ample offers of Jumbo and Super-Jumbo steer hides, in addition to plenty of regular weight HNS. There were also numerous selections of wet blue hides.
With regards to asking prices, sources reported they were mixed. We are aware of some packers who opted to leave their asking prices unchanged, happy to counter bids as they were received. A couple of packers lowered their asking prices by $1-2. We are aware of one packer lowering prices on some selections by as much as $5-7, which was interpreted by the trade as the packer attempting to move some of their asking prices closer to the levels at which product is really trading.
The other interesting thing noticed on offer lists was the shipping times. Sources shared that at the beginning of the month most packers were offering hides for January/February shipment, conveying to prospective buyers the idea that they possessed strong sold forward positions. However, last week sources reported that on the majority of offers the shipping times were mostly for December, confirming suspicions that packers have been exaggerating how far sold they were.
In other news, sources report packers were reaching out to some of their “old friends” last week in an attempt to generate business. This usually takes place when packers find themselves “behind the eight-ball” and in need of sales.
As to interest last week, things got off to a sluggish start. However, once packers began to make it clear that they were willing to negotiate prices, there was a considerable number of hides sold from Wednesday through the end of the week. Prices were $2-3 lower than the previous week’s trading levels. There were also rumours of some sales at lower levels.
At the end of the day, the conversations that we have had with various members of the trade make it appear very likely that sales last week will at least match the harvest (keep in mind that we had a holiday-shortened week of harvest last week). It will be interesting to see if there is any decent follow-up interest this week.
Reports from the cowhide trade claim producers entered last week with offers lists that were just as populated as the previous week. Popular opinion of the trade is that most lists were even more populated. Overall, it appeared most producers had a full complement of offers, with many selections available for prompt shipment.
Most producers opted to leave asking prices unchanged. This is due to the fact that trading levels on some selections are so low that to lower the price any further would be to reach a point at which the hide does not have enough value to justify processing it.
With regards to interest last week, we are hearing mixed reports. According to some sources, there were producers who enjoyed moderate interest last week, albeit at lower levels, while other members of the trade claim they did not see as much interest due to the fact there are numerous offers of cowhides from various origins around the globe.
As to trading last week, producers do not appear to have been as fortunate as their big packer brethren. Sales were not as easy to come by, especially if sellers were attempting to trade as close to steady levels as possible. The trading that was concluded last week is believed to have happened at levels $0.50-1.0 lower.
The look ahead
As to our initial thoughts for this week, with regards to the harvest, we are of the opinion that after a holiday-shortened week last week it is likely we will see a return to the levels of previous weeks. This is because packers continue to register some of their most lucrative profits in recent memory.
In terms of offers, even though we believe a decent number of hides were sold last week, we still look for offer lists to be well populated, with the majority of selections offered for shipment before the end of the calendar year. It is well known that several packers traded at levels lower than their asking prices last week and it will be interesting to see if they opt to adjust their asking prices this week in order to reflect the levels they traded at last week.
At the end of the day, our opinion of the market remains unchanged. Globally, the supply of hides still appears to exceed demand. In the meantime, we continue to hear reports that automotive demand is showing signs of the start of a sizeable reduction in requirements for a number of tanners. This is certainly not good news for those selling hides. If we were a producer, we would continue to sell into this market as best we could.
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