Courtesy of The Maxfield Report
www.themaxfieldreport.com

Maxfield report

Most packers entered last week in possession of offer lists still well populated, as many selections offered were available for prompt or immediate shipment. Some packers opted to leave asking prices unchanged, preferring to counter bids as they were received, while others lowered price ideas by $1 to $2 depending on the packer and the selections. 

In regards to interest last week, the number of bids last week fell short of the bids seen the previous week. We also understand the buyers willing to share their price ideas had no issue with bidding prices aggressively lower than the week prior. As to sales, there were not as many hides sold last week and the week prior. Trading levels, according to most pundits, were $1 to $2 lower, depending on the packer and the selection. This much is for sure: it is highly unlikely we saw packers clear their production last week. 

Towards the end of last week, we started to see a slight decline in harvest numbers. We suspect the situation surrounding COVID-19 is starting to take a toll on box beef demand as we saw numbers fall by 17,000 head or 2.6%. However, even with the reduction in harvest numbers, we are still higher than levels of a year ago and we will likely see harvest numbers slip a bit lower this week. 

Reports from members of the cowhide trade last week parallel those in the big packer trade. The majority of offer lists seen last week continue to suggest producers have well-populated offer lists with most, if not all, selections available for prompt shipment. 

Like some of the big packers, some producers opted to leave their asking prices alone, preferring to counter bids as they were received, while other producers lowered their asking prices by roughly a dollar – viewed as an effort to move asking prices close to actual trading levels. 

There did not appear to be as many bids to choose from as a week ago, leading to widespread speculation that producers failed to liquidate their production last week. In terms of trading levels last week, most sales were concluded at levels a dollar lower from the week prior, while there were unconfirmed rumours of some selections trading at levels even lower. 

The Look Ahead 
Obviously, all the talk this week is about COVID-19 in the US and Europe. There are already a number of states in the US in “shutdown”, with widespread speculation that many other states – if not the entire union – will follow before the week is over. Our friends in Europe are reporting a similar situation and we suggest readers check with their local and federal authorities for updates as the situation continues to develop by the hour. 

Many businesses and retailers are closing their ships for the next few weeks, while a number of restaurants have already decided they will only offer drive-through or curb-side service – thus eliminating all dine-in service as the US tries to control the spread of the disease. In addition, schools are closing left and right around us, many for at least a month. 

For the nation’s harvest, the intention for now is to continue operations as normal, but again, this is a situation that is developing. We understand many packers are asking those who can to work from home. No doubt this is a very serious situation and again we encourage our readers to verify all information as we certainly are not in the business of spreading misinformation. 

Looking ahead, we expect to see lower harvest numbers as we move into the next few weeks; as to what extent, it will depend on the health of those coming to work. We suspect those selling hides will welcome lower numbers, as there is already a substantial overhang of unsold hides. Unfortunately, lower numbers will come as a result of illness – which saddens everyone. 

The good news is that over the course of the past couple of weeks, we have seen some steady improvement from Chinese tanners. Of course, it is a far cry from normal volumes, but it is good news in a market where you do not have to look far to find bad news. There remain huge concerns about future demand from Chinese consumers and now demand from consumers in the US and Europe. This has pundits predicting we may see hides at historically low values for the interim and it is unlikely this will change for the foreseeable future.

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