US PERSPECTIVE—14.01.20
14/01/2020
www.themaxfieldreport.com
Packers confidently entered the big packer trade last week claiming to possess strong sold-forward positions. Supporting these claims, sources said that offer lists appeared shorter and were dominated by various selections of Jumbo steer hides.
Regarding asking prices, packers mostly seemed content to offer the same levels as recent weeks, though some packers did ask for a dollar more to help with freight costs for their heavier steer selections. Supporting packer claims, sources reported that shipping times for most hides offered were for the second-half February or March shipment, with no reports of any offered for prompt shipment.
The week got off to its usual slow start, with buyers continuing to test the will of packers and bidding prices a couple of dollars lower than the last traded levels. Overall, packers were reported to be countering bids at full asking prices, while few prospective buyers appeared interested in purchasing a large quantity.
The second half of the week saw slight improvement in the number of bids; however, trade members do not believe bids were plentiful. Prices were no worse than steady with the week prior, while we are aware of some sales at incrementally higher levels. Popular trade opinion is that it is highly unlikely packers sold their production last week.
Elsewhere, reports claim that cowhide trade producers entered the week confidently, after enjoying some decent sales recently. Also, last week’s published offers by processors were noticeably shorter than the weeks leading up to the holidays.
Regarding asking prices, producers were looking for prices roughly a dollar higher than the last reported trading levels. Sources also claimed that bids were sluggish at first, with buyers looking for limited quantities and starting prices under the last reported trading levels. However, producers were quick to counter bids at full asking prices, and buyers begrudgingly followed, buying what is believed to be minimal quantities at higher prices. Overall, popular trade opinion is that it was unlikely that producers were able to sell a week’s worth of production and sellers were pleased with the results of last week, as most obtained slightly higher levels on modest quantities sold.
Asian tanners are due to depart for their annual Chinese New Year celebrations soon, so with this in mind and the improvement in leather business for most tanners compared to a year ago, we believe we will see a decent number of bids in the next week to ten days.
In the meantime, we are keeping an eye on harvest levels as last week saw almost 10,000 more harvested than at the same time last year, so it will be interesting to see if packers continue at this pace, especially with their margins moving back to more “normal” levels for this time of year.
Overall, we believe that producers possess decent sold-forward positions and if we are to see any change in prices moving forward, we believe there is more upside to the market than downside.
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