US Perspective – 26.02.19
26/02/2019
www.themaxfieldreport.com
Packers in the big packer trade entered last week with offer lists that were for the most part unchanged compared to the previous 2-3 weeks. This caught most members by surprise, as sales were relatively uneventful in the previous three weeks. This had led to thoughts that we would see more selections offered and that the number of loads for sale would increase.
Packers opted to keep asking prices unchanged, while there was no visible change to the shipping times on the hides offered. Several members of the trade felt many packers could ship hides earlier than they were advertising.
With regards to interest last week, there was an improvement in the number of bids compared to the previous few weeks. This is not much of a comparison, however, as the previous three weeks of sales had been lacklustre. If they were recorded separately, they could be some of the lowest of this year.
Attempts by packers to improve on their last traded levels were met with considerable resistance from prospective buyers, while attempts from buyers to bid prices lower than the last established trading levels were refused by packers. Sales last week were no worse than steady. It is highly unlikely we saw packers clear their lowest week of harvest for the year.
In the cowhide trade, it appears producers may enjoy stronger sold forward positions than their big packer counterparts. This is despite the fact that harvest levels are running at slightly higher levels than a year ago.
Producers entered last week with offer lists that were a carbon copy of the previous few weeks. Sources report no change in the types of selections or the number of loads offered. Asking prices were also unchanged and several producers had shipping times that were easily as far out as offers of big packer hides, if not further out.
As to interest last week, the number of bids was higher than in the previous three weeks. However, considering the general lack of interest during that time, the bar was set fairly low.
With regards to sales, any effort by sellers to push for higher prices was met with quite a bit of resistance from buyers. Any attempt to push prices below the last traded levels were vehemently refused by producers. Sales were likely the largest of the past month and at roughly steady levels.
The look ahead
Considering the lack of sales since the middle of January, it is likely we could see a few more hides for sale this week, especially from some of the big packers. There is speculation that several packers have been using ‘smoke and mirrors’ to make their sold forward position appear better than it actually is.
The good news for the trade is the announcement at the end of last week from President Trump that he had agreed to delay increasing tariffs. He explained in a tweet that if negotiations progress, he will meet President Xi in China to finalise everything. This has certainly been welcomed by those selling hides, as increasing tariffs to 25% would be hugely detrimental to the price of cattle hides.
We are fast approaching the APLF exhibition in Hong Kong. We suspect we will start to see some attendees departing towards the end of this week. We could see some activity from traders as they attempt to position themselves as many will travel to visit customers before the show.
Considering the lack of activity we have seen since the middle of January and the fact that we are reaching the home stretch of the busy season for tanners, we could see some decent activity in the near future. The challenge is for producers to hold prices steady, especially considering that after last Friday’s USDA Export Sales report there have been 700,000 more hides produced than sold. It will be interesting to see if producers can keep this market together before the trade gathers in Hong Kong.
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