US Perspective – 21.05.19
21/05/2019
www.themaxfieldreport.com
Packers in the big packer trade entered last week with offer lists of wet salted hides that were more populated than the previous week. All packers appeared to have a full complement of selections, with most, if not all, of them available for prompt shipment.
Many packers made substantial adjustments to asking prices last week, with the prices of most selections down $1-2. Some selections were lowered by as much as $3. That being said, it is worth noting that many members of the trade said they knew of trading that took place the previous week at levels even lower than the adjusted asking prices of packers.
It certainly appears that producers of wet blue hides do not need to sell, as those selling wet salted hides do. The sentiment of the trade is that the sold forward positions of producers have deteriorated somewhat in the past 3-4 weeks. Overall, sources report offers lists were a bit more populated, with shipping times on most selections just a few weeks out. Asking prices had been exceeding the asking prices of wet salted hides by $20-22 per piece. Last week, it appeared this had dropped to $18-20 per piece.
In terms of interest, things got off to a slow start last week. However, when it was discovered that packers were more willing to negotiate prices, the number of bids improved considerably in the second half of the week.
As to the number of hides changing hands last week, it is believed many sellers enjoyed a decent week of sales. However, we are not aware of too many sellers who sold more than their weekly production. Sales took place at levels $1-2 lower than the last reported levels, while a couple of selections saw declines closer to $3.
Elsewhere, reports from the cowhide trade claim producers entered last week with offer lists that were more populated than the week before. Most, if not all, producers had a full assortment of selections for sale. All selections were available for prompt shipment, amid speculation that producers are in one of their worst sold forward positions in recent memory.
There was a mixed bag in terms of asking prices, with some producers refusing to further reduce their asking prices on some lower grade selections as this would make them close to having no value. Asking prices for better quality selections were $1-2 lower.
Sources report interest was similar to that seen on big packer hides, with the week getting off to a sluggish start. The number of bids improved considerably by the middle of the week, fuelled by reports that producers were willing to negotiate prices. The unanswered question was whether producers were able to liquidate their production last week. We are not aware of any pundits claiming this was the case.
The look ahead
If reports are correct that producers enjoyed a decent week of sales against last week, that would mark three consecutive weeks of them doing so. Over this period, we have seen two million animals reaped, which means sales have likely only allowed producers to tread water. The overhang of unsold hides still remains.
As a result, we look for offer lists to remain very populated. We do not believe that enough hides have been sold to allow producers to ground the market, although few would be opposed to prices stabilising. Until we see more positive signs in the marketplace, we feel it is unlikely the downward pressure will ease.
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