US Perspective – 12.5.15
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Last week saw big packers firm their posture a bit, as sources reported packers were not nearly as anxious to chase the lower ideas of buyers. We heard numerous accounts of packers refusing to counter bids from buyers $2-$3 and more under their last reported trading levels. Meanwhile, for the most part, it certainly appears with the exception of heifer selections, packers as a group were able to hold steer prices relatively stable.
As to the number of hides sold last week, it appears opinions are split. We have spoken with sources who shared they did not have a very busy week, while others are laying claims to enjoying a decent amount of trading. The other thing to keep in mind, some members of the trade were of the opinion there were a decent number of hides sold at the end of the week prior that did not make last Thursday’s report and that is why some members are looking for this week’s report to exceed the slaughter.
As to trading levels, sources share ideas on HTS were running around $88-$89 delivered, while ideas on BS were nearly identical. In the meantime, we heard that ideas on BBS ranged from $99-$100, while there were isolated claims of sales as high $102 delivered, while HNS were sold at $103-$104.
Meanwhile, in the cowhide trade, sources report sales were difficult to conclude, with a number of variables to blame. The two largest challenges facing sellers are the more-than-ample offers from other origins around the globe, including Brazilian wet blue and crust. The other issues are a general lack of demand attributed to a decrease in leather orders for lower quality leathers and the pollution problems in the northern part of China, which is well known for their preference of US cowhides.
Overall, sources share interest was minimal last week, while we understand buyers willing to share ideas had very aggressive price ideas, several dollars under the last reported trading levels. As to the number of hides exchanging hands, popular opinion is that it is unlikely producers liquidated a week’s worth of production in spite of slaughter levels that continue below levels of a year ago.
As to trading levels, there are rumours all over the board, with a wide range of prices, many of which we were not able to confirm. Meanwhile, for the most part, we have called prices last week unchanged; however, if prices are to change they are likely to go lower before they move higher.
THE LOOK AHEAD
As to what we expect for this week, packers will continue with their efforts to hold prices close to their last traded levels. However, they will need to keep one eye on the slaughter, as the number of cattle coming to harvest is slowing rising, margins are now into the black and there are warmer temperatures on the horizon (although it is feeling more like winter here with temperatures at in the low to mid-40s F).
Meanwhile, the challenge may be facing those selling cowhides. Popular opinion is that several producers may be in possession of some sizeable unsold inventories, while those who have orders on the books are struggling to obtain letters of credit or dealing with requests to delay shipment.
Another huge problem for producers is the number of “M” brand HTS being produced from packers. These hides are from the Mexican cattle being slaughtered in the US and packers are now making this a separate selection, as the grading on these hides is not equivalent to traditional big packer hides. Rather, these hides are closer to the grading of heavier weight HBC which producers had been receiving a sizable premium. Sources share “M” brands offer perspective buyers an extra 10-14 pounds than offers of heavier weight HBC and has certainly shrunk the premium between a regular weight HBC and a heavier weight.
