US Perspective - 25.06.19
25/06/2019
www.themaxfieldreport.com
Last week in the big packer trade, we saw a mixed bag of offers. Some packers did not offer a full complement of selections and there a couple of lists missing offers of BBS and HNS. Most other packers continued to publish offer lists with full selections, although there was some chatter within the trade that not as many selections were available for prompt shipment.
As to interest last week, things got off to a slow start, with many members of the trade reporting mid-week that they had not seen many bids. By the second half of the week, we understand many packers were seeing a decent number of bids. The good news is that the number of buyers bidding aggressively lower seems to have disappeared. Buyers looking for product last week started with ideas that were lower than the last reported traded levels, but they appeared more than willing to improve their ideas once countered by packers.
Overall, the business concluded last week likely took place at no worse than steady levels. On a few selections, packers were able to eke out some incremental price declines, depending on how badly the tanners needed the product and/or how much traders needed to cover their positions.
With regards to the number of hides changing hands last week, not all members of the big packer trade enjoyed a fair number of bids. Coupled with the insistence from most sellers of no worse than steady prices, we feel that we will see a decent sales number when USDA releases its weekly Export Sales Report on Thursday, although the number may not exceed the harvest.
Meanwhile, reports from the cowhide trade claim most producers entered last week still in possession of large offer lists; most had a full complement of selections on offer. However, we understand that one of the larger processors shortened their offer lists and raised prices on a number of the selections. Other producers opted to leave asking prices unchanged.
With regards to interest, as with the big packer trade, things got off to somewhat of a sluggish start before interest and activity picked up towards to the second half of the week. It was not nearly as busy as the big packer hides.
Overall, sources seemed pleased that the really aggressive price ideas appear to be easing. However, with so many cowhides for sale globally, most producers appear content to continue to sell at steady levels. Producers may have been hard pressed to clear their production last week.
The look ahead
We have started a new week of trading, which is the last not only for the month of June but also for the first half of 2019. We are leaning towards thoughts that with packers buying cattle cheaper last week and the Fourth of July holiday next week, it is possible we will see one of the largest harvest weeks of the year.
Meanwhile, summer holidays are on the horizon in Europe. With speculation that there are a number of hides already sitting in various warehouses around Europe, it will certainly be interesting to see how those selling hides manoeuvre this year.
In terms of offers this week, with packers having enjoyed decent sales for the past 4-5 weeks, they have a little bit of momentum in their favour. However, we suspect that any packers thinking of trying to obtain higher prices may find this to be a difficult task as the fundamentals of the market have not changed and the high harvest levels will continue next month.
The wild card in the equation remains leather business. At the time of writing, we are not aware of anyone claiming that there has been an improvement in the number of orders. However, we need to remember that in the past we have seen tanners start to think about buying hides in the second half of July in anticipation of their fall leather season. We will have to see if this proves to be true again this year.
Share this story:
