US PERSPECTIVE - 09.06.20
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Last week in the big packer trade saw all of the big packers offering wet-salted hides, while offer lists appeared as if they were a bit more populated as well.
Packers started the week with prices that were in line with the past few weeks, with most still laying claims to being well sold, in spite of the fact sales the past few weeks have been fairly lacklustre, while harvest levels were steadily increasing and are now near normal levels prior to the covid-19 outbreak.
The good news is that there did appear to be a few more bids than the week prior, which was a holiday week. The challenge for those selling hides is most buyers recognise that harvest levels are increasing, while demand is not yet showing signs of returning, and therefore were reported to be bidding prices aggressively lower, attempting to determine the positions of packers.
That said, packers appeared as if they were intent on trading at no worse than steady levels and for the most part, appears the majority of business took place close to steady levels.
Last week was a busier week of trading than the week prior. However, with harvest levels returning close to normal levels, sales will not be anywhere close to harvest numbers when the USDA releases its weekly Export Sales Report this Thursday.
Elsewhere, reports from the cowhide trade claim producers had a full complement of offers. It appeared as if several producers had more loads for sale compared to the week prior, with a number of selections appearing as if they were available for shipment promptly.
They were not as fortunate as their big packer brethren, as they did not see any substantial improvement in the number of bids. Producers started the week with offer lists that were unchanged with the week prior, while the limited number of bids submitted saw most buyers attempting to bid prices lower. There was simply not enough interest for lower quality hides, and there were a number of producers with unsold inventories. Trading last week, saw producers “limp by” with sales at precariously steady levels on very limited volumes, while there were a number of “rumblings” of direct sales done quietly at levels lower than asking prices.
THE LOOK AHEAD
As to our thoughts for the week ahead, it certainly appears as if packers have regrouped and are close to operating at full capacity, leading to thoughts by some pundits that we could see as many as 650,000 head “knocked” this week. Shipments the past several weeks have been lagging the harvest and although we know many of the packers will lay claims to being well sold, we cannot help but question if some of these claims might be exaggerated.
What will be interesting to see this week: 1) if offer lists of packers are more populated; 2) shipping times on hides offered; and 3) how committed producers will remain to trying to hold prices steady in light of the fact that harvest numbers have been overwhelming sales numbers the past several weeks. Although we are seeing an improvement in demand from Chinese consumers, the US and Europe are not as far as long in their easing of restrictions and if we were a producers we would be looking to sell in to this market, as we believe if prices are to change - there is a much better chance they move lower before higher.
