US Perspective – 18.06.19
18/06/2019
www.themaxfieldreport.com
Last week in the big packer trade, most packers entered the week with offer lists that continued to be fairly populated. Many had a full complement of offers. Packers opted to leave their asking prices unchanged for the most part, but there were reports of some packers pushing for slightly higher prices on a couple of more popular selections. The shipping times on hides pushed out to July, but we believe this is more a function of the calendar than a case of packers being able to extend their sold forward positions.
Interest last week was similar to the previous few weeks. We are not aware of any member of the trade laying claims to enjoying any huge improvement in the number of bids last week. It is worth noting that the number of very aggressive bids (where the price ideas of buyers on a delivered basis were lower than FOB asking prices) decreased considerably last week. It appears packers had their sights set on holding prices as close to the last traded levels, and moving them to slightly higher levels where possible.
There appeared to be some sudden interest in heifer hides last week, and we heard from a number of sellers that tanners in Mexico were looking for lighter weight hides. Offers of steer hides with brands were not nearly as prevalent last week and those with offers were not bashful in their price ideas. Overall, sales last week might struggle to match the harvest. However, on a more positive note, it appears several selections were sold last week at levels a dollar or two higher than their lowest levels reported for the year, which were recorded last month.
Elsewhere, reports from the cowhide trade are that the offer lists of producers last week had not changed much from the previous few weeks. The majority of producers continue to offer a full complement of selections. Most sellers remain committed to holding prices as steady as possible. They believe prices are low enough and most appear to have drawn the proverbial line in the sand, refusing to trade at lower than their last traded levels.
With regards to interest last week, interest on HNDC was enough to allow producers to trade at steady levels. Interest/activity on HNC and HBC did not reflect much of an improvement compared to the past few weeks. This led to thoughts that it is unlikely producers were able to clear their production last week. Popular opinion of the trade it that prices were no better than steady.
The look ahead
As for some initial thoughts for this week, packers appear to have found a trading plateau over the past 2-3 weeks. This has allowed them to stop the decline in prices and, in the case of several selections, some of the trading levels from last week are a couple of dollars higher than the lowest levels we saw last month. From our vantage point, packers seem to have a bit more momentum on their side, allowing them to dismiss the lower ideas of buyers still looking for bargains.
That being said, we are by no means leaning towards thoughts that prices are on the verge of moving higher; packers are committed to keeping prices no worse than steady. This could be a bit dicey for packers as harvest levels are poised to continue at around 660,000 head. It will require strong sales in order to keep pace.
In the meantime, we need to keep in mind that June is historically not a strong month for demand from tanners. However, once we move past the Fourth of July holiday, demand from tanners tends to improve a bit as they start to look for summer hides for orders leading up to Chinese New Year.
There are still a number of unsold hides in several parts of the world. This includes Europe and with the summer holidays fast approaching there, we are very interested to see how things play out. We acknowledge that we have seen hide prices bottom, but the question is whether this is the true bottom of the market. Until we see some of the lower grade selections of hides from around the world removed from the equation, we will continue to see pressure until supply and demand are brought into balance.
Share this story:
