US Perspective - 10.12.19
10/12/2019
www.themaxfieldreport.com
Last week packers reduced the number of selections they were selling, which led to a transition in offer lists. Meanwhile, the number of HNS & BBS offered appeared to increase, alongside a noticeable increase in the number of Jumbo steer hides offered. Regarding asking prices, packers collectively priced hides at recent levels. Another noticeable change was that most of the selections offered were for shipment after the upcoming holidays.
As to interest last week, sources claimed that the number of bids at the start of the week reflected more interest than recent weeks and that most of the buyers willing to share their price ideas continued to bid at levels a couple of dollars under asking prices. As the week progressed, the number of bids increased as usual.
Lower-priced bids were countered at full asking prices by packers, which is good news for those selling hides. A number of potential buyers improved their bids by a dollar or more, which is a stark contrast to previous weeks, when they would improve their ideas by fifty cents at a time. Overall, popular opinion is that there were likely as many hide bids last week as the week prior; however, not all buyers seemed willing to pay the asking prices of packers and this, coupled with the largest harvest levels in nearly a decade, has most pundits believing it is highly unlikely packers liquidated their production.
Cowhide trade members reported that many producers entered last week with offer lists that were not nearly as plentiful as recent times, as it appears the majority of producers have enjoyed some decent recent sales. As a result, many selections were missing from the producers’ offer lists, especially HNDC, which appear to have been in decent demand recently. In addition, trade members shared that, although there were still offers of HNC/HBC on many offer lists, it appeared there were not as many loads offered and shipping times were for after the holidays.
With regards to interest last week, things got off to their usual sluggish start, but by the second half of the week the number of bids increased; however, the trade consensus is that there were not as many bids as the past few weeks. Pundits blame the volume of hides sold recently, as well as fewer offers, for the decrease in interest. However, several producers were reported to be pushing for some incremental price increase, which appeared to have “turned off” some buyers.
Overall, trade opinion is that the number of bids last week matched with the week prior; however, it did not appear as if there were as many hides changing hands and with harvest levels running at some of their highest levels of the year, it is very likely we did not see producers clear their production. Pertaining to trading levels, they were no worse than steady to incrementally higher.
As we set out on a new week of trading, we have a few initial expectations. The first is that we will not see a harvest as large as last week, as packers watched box prices erode by roughly $12 per hundredweight, while watching live cattle prices move up by $2 per hundredweight, which came off the bottom line of the packers. Meanwhile, pundits agree that weekly sales fell well short of the harvest and should result in a few more hides offered this week.
There are only two full weeks of trading left for 2019, as we assume the Christmas week will likely be a lost week of trading. That said, we suspect buyers will make their last-minute buys before the end of the year. In the meantime, we are interested to see if there are any developments in the US and China trade war, as tariffs are set to increase on December 15, which would not be a positive for the hide trade.
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