US Perspective - 02.04.19
02/04/2019
Packers entered last week with offer lists that appeared more populated than those of the past few weeks. They increased the number of loads offered, as well as adding some new selections to their offer lists as well. In addition, shipping times on the selections offered tended to indicate to the trade that packers do not possess strong sold-forward positions; the majority of selections offered were for mid-April or May shipment, supporting speculation that packers were carrying more unsold hides than they are willing to admit.
As to asking prices, many of the packers lowered their price ideas by roughly a dollar on most selections; this was interpreted as an effort to bring asking prices closer to actual trading levels. However, it is worth noting that there were numerous reports of business concluded the week prior at levels even lower than the adjusted asking prices of many packers.
Reports early last week indicated agents for many of the packers appeared to be much more aggressive, reaching out to some of their preferred customers in order to gauge interest in voluminous type business, available to ship promptly. This resulted in rumours of packers concluding business directly with tanners at prices that, if correct, would be several dollars under the official asking prices.
There is no question that in order to conclude business last week, sellers had to be willing to negotiate prices and we are calling prices down anywhere from $1-$2, depending on the packer and the selection.
Reports from the cowhide trade claim that producers entered the week with offer lists that appeared unchanged from those of the past several weeks.
Regarding interest last week, sources report things got off to a slow start, while it is important to remember that the number of cows in the harvest mix in the past three or four weeks has been running at unseasonably high levels. In the meantime, it appears the combination of large harvest numbers and a considerable amount of pressure in the big packer market started to force the hands of those selling cowhides and by the middle of last week, it appeared buyers were a bit more willing to negotiate prices, resulting in lower trading levels.
As to the number of hides changing hands, it is highly unlikely that producers were able to liquidate their production last week, leading to thoughts that it is likely we will see the offer lists of producers a bit more populated this week.
Producers are entering the the second quarter of the year with plenty of unsold hides and it will certainly be interesting to see how things play out over the course of the next few weeks.
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