US Perspective - 23.07.19
23/07/2019
www.themaxfieldreport.com
Big packers entered last week with offer lists that did not appear as populated as the previous week. In addition, packers claimed to have improved sold forward positions, which was supported by the fact that the majority of selections offered were for shipment in the second half of August or the first half of September. Some packers left their asking prices unchanged last week, but most opted to raise them by between one and two dollars, depending on the packer and the selection.
In terms of interest, the majority of sources said there were noticeably fewer bids last week. Pundits blamed a combination of higher asking prices and the fact that a number of tanners are believed to have stepped in the past 3-4 weeks and covered their needs at lower prices, with some of the best hides of the year. This led to thoughts that most tanners have ample raw stocks to meet their lacklustre leather orders.
The consensus of the trade is that it is unlikely packers sold their harvest last week. The good news for packers is that last week the hides that changed hands did so at full asking prices. Packers did not find it easy to sell hides at their asking prices.
Reports from the cowhide trade claim producers entered the week with offer lists as populated as the previous few weeks. The good news for those selling hides was that they started the week with asking prices in line with previous weeks. As to interest, the week got off to a sluggish start, although the number of bids showed signs of improving in the second half.
In spite of producers’ efforts to hold prices steady, a number of them appeared a bit too eager to sell HBC/HNC and were willing to negotiate prices. This led to reports of these selections trading at slightly lower levels.
Overall, there were a decent number of hides changing hands last week and it is possible that producers were able to sell a week’s worth of production. The question on everyone’s mind this week is if producers sold enough hides last week to prevent even lower trading levels this week.
The look ahead
As to our initial thoughts for this week, although packers laboured a bit last week in their attempts to achieve higher prices, we do not believe that will affect their mindset. That being said, considering the amount of resistance most packers met with last week, we would be surprised if they attempted to raise their asking prices again.
Meanwhile, we are very interested in the cowhide market, especially after learning that a number of producers begrudgingly took less money last week. It will be interesting to see if there were enough hides sold last week in order to allow producers to avoid taking any further discounts.
In other news, harvest levels continue to run above the levels of a year ago and this trend is expected to continue well into next month, likely up to the Labor Day holiday in the US (first Monday in September). The summer holidays are in full force in Europe and it will be interesting to see how active tanners in Asia are in the next few weeks, especially with them knowing full well they are “the only game in town”.
Overall, our opinion of the market has not changed. Although we have seen a nice run-up in the prices of big packer hides, it certainly appears that trading was a bit thin last week in terms of the number of hides sold. This leads us to suspect that we have perhaps found the top end of the trading range.
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