US Perspective—02.05.17
02/05/2017
www.themaxfieldreport.com
Reports suggest packers enjoyed a decent week of sales last week; we could see combined sales that will easily exceed last week’s record slaughter when numbers are released on Thursday.
Trading levels were down anywhere from $2-$3 from the week prior, depending on the packer and the selections. Some members of the trade claim a third variable also weighed heavily on prices last week, the question of when buyers could take delivery. Rumours claim those with the ability to take prompt delivery could buy at even cheaper levels.
Producers of wet blue continue to flood the market with offers. We continue to hear numerous members of the trade speculating that some producers of wet blue are supposedly evaluating their wet blue business, with rumours of possible closures and reductions in soaking levels.
Reports from the cowhide trade last week appear mixed. Sources report not seeing a lot of interest from perspective buyers, while the few bids they did see had buyers with price ideas well below the asking prices of producers. A number of producers appeared as if they were “anxious” for sales and there appears to be a moderate number of hides changing hands at levels $1-$2 below the last reported trading levels.
As to some initial thoughts for this week, we tend to suspect those producers who enjoyed a decent week of sales last week will be inclined to boast about their sales and shorten their offer lists this week by not offering as many selections. We doubt we will see any of the producers attempt to raise their asking prices, but we could certainly see producers who are laying claims to enjoying a decent week of sales last week opting to keep their asking prices unchanged.
We have our doubts if one decent week of sales is enough to mend the sold-forward positions of all producers. Especially keeping in mind that the number of hides produced versus sold this year still reflects a substantial shortfall of 1.7 million hides.
In the meantime, producers are likely to get a breather from the slaughter this week, following last week’s record 624,000 head slaughter.
We are in a market that is in transition and we do not have to see prices drift downward every week, especially by $2-$3 a time. However, we remain of the opinion there are still a number of sellers that are in need of sales.
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