US Perspective - 16.09.19
16/07/2019
www.themaxfieldreport.com
Packers entered last week with offer lists that did not contain as many big hides for sale as the past several weeks. The shipping times on many of the hides offered had moved out by two or three weeks, which encouraged packers to raise asking prices by roughly a dollar compared to the week prior.
Things got off to a bit of a mixed start. Some sellers shared they were fortunate enough to sell all of their hides at full asking price before close of business on Tuesday. Other members of the trade claimed things got off to a lacklustre start, attributed to the fact sellers were looking for higher prices.
As the week progressed, buyers begrudgingly started to recognise that if they were going to buy hides last week that they would have little choice but to pay the full asking price, as packers had little or no interest in negotiating prices. Overall, packers appear to have enjoyed a decent week of sales, although we are not clear if they were able to sell their full production last week. They were certainly able to lay claims of trading at slightly higher levels.
By the end of the week, there were rumblings that some of the packers were withdrawing their offer lists and there were not many hides still for sale by the time Friday rolled around.
Reports from the cowhide trade claim most producers entered last week in possession of offer lists that were in line with the past two or three weeks. One of the larger processors was reported to have an offer list that did not have nearly as many selections for sale. This raised the prices of the hides they were offering by as much as a couple of dollars.
Producers saw some modest interest in cow hides last week, but it does not appears as if they saw as much interest as some of the big US packers. They had no intention of succumbing to the lower-price ideas of buyers, and buyers who were bidding at lower prices were reported to have improved their bids to the last traded levels by the second part of last week, recognising producers had little or no tolerance for lower prices.
As to the number of hides changing hands last week, we are not convinced producer sold their full production. However, that said, we also noticed the number of cows and bulls in the harvest mix was 6% lower than the week prior to the July 4 holiday. We continue to hear rumblings that the number of cows available to harvest is expected to tighten here in the third quarter.
We are looking for a slightly lower harvest number this week, due to packers having to pay more for live cattle last week, coupled with box prices declining. We expect packers to curb their enthusiasm this week in order to bring live prices and box prices back to more desirable levels.
We would not be shocked if we saw fewer offers from packers this week than last, as many of the packers continue to convey they now possess decent sold-forward positions. What we find intriguing is the fact packers have been successful in pushing prices higher over the course of the past three or four weeks, at what is not known historically as a busy demand time for most tanners. In addition, this has been accomplished despite the fact that there are a number of hides still unsold in Europe, Brazil and to a lesser degree Australia.
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