US Perspective – 29.01.19
29/01/2019
www.themaxfieldreport.com
Last week in the big packer trade saw offer lists missing a number of selections that were present in the previous couple of weeks. This was the result of packers laying claim to having enjoyed a decent round of interest during the previous few weeks. According to sources, many of the more popular wet salted selections were missing, with offers mainly consisting of Jumbo and Super Jumbo steer selections. There were some offers of HNS, which has seen demand considerably dwindle due to poorer than expected automotive sales around the globe.
What we found interesting is that one of the major packers published an offer list that appeared to mirror their offers of the previous two to three weeks. However, what was noticeably different was that the shipping times on the many of the selections had moved out anywhere from two to four weeks, depending on the selection. With regards to asking prices, packers opted to either leave them steady or move them up a dollar.
With regards to interest last week, popular opinion of the trade is that there were not nearly as many tanners willing to share their price ideas. It also appeared the number of “bargain hunters” (tanners who were bidding aggressively lower) was lower than in the past few weeks. Overall, consensus of the trade is that there were not nearly as many bids to consider compared to the previous two to three weeks. There were a wide range of reasons for this, ranging from a lack of offers to firm asking prices from packers. There were also thoughts from pundits that many buyers had completed all of their purchasing needs prior to departing for the Chinese New Year celebrations.
The sentiment of the trade is that it is highly unlikely that packers were able to clear their production last week, despite the fact that we are seeing smaller harvest numbers. However, the good news for packers is that it appears as if trading levels were no worse than steady, and slightly higher on a handful of selections.
Reports from the cowhide trade claim producers entered last week riding a crest of momentum after decent sales over the course of the previous few weeks. This allowed producers to mend their ailing sold forward positions, while also allowing them to improve trading levels on most selections compared to the lows seen prior to the Christmas and New Year holidays.
As to offers last week, most producers had offer lists that were not nearly as populated. Offers of HNDC and fed-HBC were difficult to come by. With regards to selections offered, it appears producers were feeling much better about the market in general, leading to reports of some looking to obtain higher trading levels and the limited number of hides they chose to offer last week.
With regards to interest last week, it appears that the number of bids dropped considerably. Most members of the trade reported having noticeably fewer bids to consider. Many pundits were blaming the lack of offers, while others thought firmer asking prices were discouraging some buyers from sharing their ideas. However, it is worth noting that some veterans of the trade were of the opinion that most tanners had completed their pre-Chinese New Year buying and that we will not see much interest this week and likely little, if any, next week.
The look ahead
As to what we expect, we believe the inactivity we saw last week could spill into this week. There were already a number of tanners who shut up shop in order to observe Chinese New Year at the end of last week, while those still open will likely be eager to wrap up their business before departing at the end of this week.
The good news for those selling hides is that last week we saw one of the smallest non-holiday weeks of harvest of 2019. There is a good chance we will see an even smaller number this week. Even so, it appears sales are not keeping pace with these reduced numbers.
Despite the possibility of two weeks of lacklustre interest this week and next, we tend to believe that producers are committed to holding prices firms. It will certainly be interesting to gauge interest during the next couple of weeks, especially next week during the holiday. If we should see some buyers nosing around over CNY, it would be a great indication that they have entered their holiday under bought.
We are very interested to see the offer lists of producers for the week commencing February 11. We suspect we will see offer lists a bit more populated if the expected lack of sales comes to fruition. It will also be interesting to gauge the interest from tanners coming out of the celebrations as the time between CNY and APLF in Hong Kong is the home stretch for tanners attempting to complete leather orders for their busy season.
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