US Perspective - 04.06.19
04/06/2019
www.themaxfieldreport.com
Packers entered last week with offer lists that were fairly well populated, with several selections still listed for June (prompt shipment). Some of the packers lowered their asking prices by roughly a dollar across the board, believed to be an effort to move their asking prices closer to trading levels. Several others left their asking prices unchanged, laying claims to decent sales over the course of the past few weeks. As to interest last week, members of the trade claimed things got off to a much slower start than expected, especially after most sellers had seen decent interest the past three or four weeks. However, by the middle of the week, it appeared the number of bids increased considerably. What was interesting about last week was that several prospective buyers started the week bidding at levels on a delivered basis that were lower than the FOB asking prices of packers.
Before the last two or three weeks, most sellers would have attempted to counter these aggressive bids; however, last week, we saw sellers telling prospective buyers they were passing, an indication they were in possession of slightly stronger sold-forward positions.
Sales last week took place at steady to incrementally lower levels and, for the first time in months, it appears prices may be close to finding the bottom end of the trading range.
As to the number of hides sold last week, it is likely we will see smaller sales on the USDA Export Sales Report.
Meanwhile, reports from the cowhide trade say producers entered last week with offer lists that were fairly populated, and here too there were still a number of selections that were available for June shipment (prompt). As to asking prices, sources report the majority of producers appeared to leave their asking prices alone on the heels of thee or four weeks of decent sales, fuelled by a couple of very large well-known tanners buying a large number of cows in the last week or ten days.
As to interest and activity last week, things got off to a somewhat sluggish start, but by the middle of the week, the number of bids improved substantially. As to the price ideas of buyers, like those in the big packer trade, many were bidding prices aggressively lower, but producers appeared reluctant to counter these bids.
Many sellers appeared to draw a line in the sand last week, refusing to accept lower trading levels and popular opinion is that the majority of business concluded was at steady levels.
We are setting out on a new week of trading and for the first time in several months it is starting to appear as if producers have a little bit of momentum on their side owing to four or five weeks of decent sales. This is leading to questions of producers being able to establish a floor to this market. They will have to move forward cautiously in our opinion, as there are producers from other major hide producing areas in the world who still appear as if they have hides for sale.
There is no denying the fact that sellers are riding a bit of momentum heading into this this week and we would think that if producers can continue to resist the lower prices of buyers and hold prices steady again this week, this would go a long way towards assisting those selling hides to sort out problems with outstanding orders.
Looking forward, we want to make it clear we are not advocating higher prices, as this would likely kill any momentum sellers have in their favour. It will be interesting to see how producers play things this week.
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