US Perspective—14.03.17
14/03/2017
www.themaxfieldreport.com
Last week the majority of packers opted to leave offer lists unchanged, while a few isolated packers raised asking prices by roughly a dollar. In the meantime, reports from members of the trade claim interest started the week noticeable slower than the week prior, while resistance to current asking prices from perspective buyers appeared as if it increased. Sellers were able to conclude some additional sales last week on wet-salted hides at steady levels. However, worth noting, several sources commented that sellers had to work much harder to accomplish this goal and the number of hides changing hands was less than the week prior. Also worth noting, as the week progressed, we were hearing more and more reports of various packers reaching out to customers who have outstanding orders to see if they would be interested in shipping product sooner than contracted, with claims that some packers who sold product for late April or May were looking for shipment before the end of March.
The above only contributed to speculation that some of the packers were trying to “secretly” trade hides to some of their “preferred” customers at levels slightly lower than the last reported trading levels. Meanwhile, the struggle for producers of wet blue hides continues as the sentiment among members of the trade is that producers continue to struggle to liquidate their weekly production.
Reports from members of the cowhide trade claim that interest last week was not nearly as brisk as in the past few weeks. It appears that as producers continue to press for higher prices, the number of buyers willing to follow the market higher is declining. Prices are no worse than steady, while buyers selling at higher prices appear as if they met a considerable amount of resistance last week, while the number of hides changing hands last week appears less than the week prior.
As this week progresses we will see more people depart for Asia to visit customers prior to the APLF exhibition (March 29-31). As usual, we expect those producers who have representatives travelling before the show to be reluctant to offer publicly, preferring to offer to customers directly. Elsewhere, on the surface, packers continue to convey a firm tone to the market; however, there were certainly a number of signs last week that not all of the packers may enjoy the sold-forward positions that they are claiming. We heard from several sources claiming they were approached by packers requesting to ship outstanding product earlier than contracted, while there were several rumours accusing some packers of selling directly to tanners at levels lower than prices quoted to traders.
In the meantime, we look for packers who publish offer lists to keep offers in line with the past couple of weeks as we suspect attempts to raise asking prices would likely go unnoticed. Meanwhile, we would be shocked if any of the packers opted to lower asking prices.
We also tend to believe that buyers who have cash and are flexible in regards to shipments may be able to negotiate prices. Meanwhile, we encourage readers to keep an eye on the slaughter this week as we remain of the opinion that we are likely to see a few more head processed this week as packers’ margins are back into the black. We are on our way to seeing harvest levels move back up over 600,000 head on a weekly basis. That is why, if we were a producers, we would look to continue selling into this market.
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