US Perspective—11.12.18
11/12/2018
www.themaxfieldreport.com
There were a few packers who opted not to offer any wet-salted hides last week, while it appeared that all other packers appeared as if they still had a full complement of selections to offer, especially heavyweight steer selections, HNS & BBS, as well as wet blue hides. Shipping times listed on hides offered last week saw approximately half of the selections offered available for December shipment (which we interpret as prompt), while the other half of the selections offered were listed for December/January (which we interpret as two-four weeks out). We mention this as we believe that these shipping times confirm what many pundits have been saying for a while: that packers have hides for sale and do not possess the sold-forward positions they have been advertising.
The price ideas of most buyers were running several dollars under the asking prices of packers. Last week likely was not a busy week of sales and considering we saw one of the largest weeks of harvest for the year last week, it is highly doubtful that packers were able to sell their production.
The huge premium between HNS/BBS and HTS continues to narrow as the sizeable decline in automotive sales around the globe has interest on these selections dwindling. In fact, sources share that sellers in the past couple of weeks have been asking potential buyers to consider buying some HNS or BBS when bidding on other selections.
Reports from the cowhide trade claim producers still appeared to have offer lists last week that were very populated, while there were many selections offered that were available for prompt shipment, supporting thoughts by members of the trade that most producers did not possess strong sold-forward positions. As to interest last week, sources report things got off to a very sluggish start as news of a truce between the US and China in regards to their trade war failed to result in any appreciable increase in bids the first half of the week. The good news is that the number of bids did improve in the second half of last week; however, considering most buyers had price ideas that were aggressively lower than asking prices, it is believed that there was not much business concluded.
This week, we suspect that we will not see such a large harvest as last week; it is highly likely that cattle owners will firm their posture this week, attempting to raise asking prices, and unless packers can add to box beef prices, any increase in live prices will come directly off the bottom line of the packers. Meanwhile, news of a trade truce between the US and China failed to ignite the market last week as the number of bids fell well short of expectations and highly unlikely packers cleared their production last week. It will certainly be interesting to see if there is any improvement in the number of bids this week, as there are only two more weeks of trading until we reach the Christmas and New Year holidays.
It is likely we will see plenty of offers this week and it will be interesting to see if packers continue to their efforts to hold prices as close to steady as possible, or if they will finally resign themselves to trading the market down.
This week is the last week of shipping hides to Asia in order to ensure they arrive before the self-imposed deadlines of tanners for Chinese New Year (February 5). In previous years, we would usually see a sizeable increase in the number of hides shipped to Europe, while Asia was closed for shipments for their holiday. Considering that the leather business for most tanners is falling well short of expectations, it will be interesting to see how those selling hides navigate this situation this year. We would think it is probably time for sellers to lower their asking prices. This would allow asking prices to reflect prices closer to where trading is actually taking place.
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