US Perspective – 09.04.19
09/04/2019
www.themaxfieldreport.com
Last week, many packers in the big packer trade had offer lists that were more populated than the previous couple of weeks. The load count for many packers was much higher and there were reports of selections being added that hadn’t been offered for several weeks. In addition, the majority of offers were available for prompt shipment, with many selections offered for shipment this month.
As to asking prices, several packers lowered their price ideas by $1-2, depending on the packer and the selection. It is worth nothing, however, that even with this decrease in prices, the asking prices of most packers were still higher than their last traded levels.
The majority of sources shared that they saw enough bids last week to call it a decent week of interest. Most of the bids made by producers were well below the official asking prices of packers. Few, if any, buyers were willing to bid anywhere close to the asking prices of packers.
It appears packers were willing to negotiate prices in order to conclude business, although they were not willing to accept wholesale discounts. As a result, it is highly unlikely that packers were able to liquidate their production last week. The consensus of the trade is that business was concluded at levels $1-2 lower than the previous week.
Elsewhere, producers in the cowhide trade entered last week with offer lists that appeared much larger than those seen prior to APLF. Unfortunately for producers, it appears a general lack of interest, coupled with a larger-than-expected number of cows in the harvest mix, has all but eroded the sold forward positions of most producers.
Offer lists were much more populated, with a number of producers reported to be offering a full complement of selections for sales. Sellers started the week with some minor downward adjustments in terms of asking prices. On a historical basis, trading levels are at levels deemed inexpensive by most.
Interest was slow to develop last week, but by the middle of the week producers say they saw a decent number of bids at lower prices. They had little choice but to try and negotiate prices. As to how things played out, we have mixed reports. Some sources claim to have concluded a modest number of sales, while many others say that any attempt to counter the lower ideas of buyers saw these potential buyers simply withdraw their bids.
It is unlikely we saw as many hides sold last week as in the previous couple of weeks. In terms of trading levels, prices were $1-2 lower than the last confirmed levels.
The look ahead
We set out on another week of trading and our expectations for this week is that it is likely to be similar to the last. Producers do not appear to have sold enough hides and we suspect we will see sellers appealing to some of their preferred customers for high-volume business that can ship relatively promptly.
In the meantime, there a couple of challenges facing producers:
1. We are approaching the end of the busy season for most tanners;
2. Harvest levels are poised to exceed the levels of a year ago as there are plenty of cattle standing and packers are enjoying highly lucrative margins.
In addition, it appears producers in other parts of the world are suffering a similar fate. We look for those producers to also press for business, similar to our expectations for producers in the US. As a result, we suspect buyers will continue to show no sense of urgency. Buyers able to consider volume and ship promptly will likely be able to negotiate prices.
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