US Perspective - 15.12.15
16/12/2015
www.themaxfieldreport.com
Last week’s activity in the big packer trade was uneventful for traders, as packers for the second consecutive week opted only to offer direct to tanners. Overall, the majority of traders reported a lacklustre week of interest. Some shared that they did see some unsolicited interest the middle of the week; however, with packers looking to improve upon their last traded levels, most interest was at the sidelines.
Several packers claimed to enjoy a decent amount of interest last week and this allowed many to conclude business at prices $1-$3 higher, depending on the selections. Pundits are not questioning the trading levels being reported by packers, however, a number are questioning how much volume was traded at the higher levels.
We experienced the largest slaughter of the year with 581,000 head reaped. Even veteran members of the trade were left scratching their heads about the larger slaughter numbers, particularly the timing. Forecasts are calling for another large week of slaughter, and we will have to see if this forces the hands of packers to open their offers to the public.
Reports from members of the cowhide trade appear mixed. We have spoken with sources who shared that interest was sporadic, attributed to the fact that most producers opted only to offer direct to tanners. However, we have also spoken with a couple of producers who say they enjoyed a decent week of sales.
As it pertains to prices, the consensus of the trade is that sales took place at levels $1-$2 higher than the previous week. Opinions are mixed as to how many hides exchanged hands, with many pundits doubting producers cleared their production, especially considering that last week was the largest cow slaughter of the year with 127,000 head reaped.
THE LOOK AHEAD
This is the last full week of work for the year for those members of the trade that observe Christmas and New Year’s Holidays. That said, it is logical to suspect that larger than expected slaughter levels last week and this week could sway a few producers to perhaps consider offering to all members of the trade.
In addition, although those selling hides have been able to lay claims to achieving some rather “fancy” prices the past two to three weeks, there is speculation swirling that producers may have not sold their entire productions over this period. This, coupled with larger-than-expected slaughter numbers and the inability to ship to Asia as we move through the remainder of December and into January, has a number of pundits estimating that prices could be approaching the top-end of their trading range.
We are aware of a number of larger tanners who have been participating on a regular basis, as many of these tanners do this in order to protect their purchases. However, when markets start to turn, many of these tanners are some of the first to cause problems for those selling hides and although we hope that we are wrong, we can see the potential for problems on the horizon, once shipments to Asia are not possible.
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