US Perspective - 11.7.17
11/07/2017
www.themaxfieldreport.com
Last week began with the majority of packers/traders with larger-than-normal offer lists, with most appearing as if they had a full complement of selections, along with more-than-ample quantities.
The prevailing opinion of the trade is that packers slowly watched their sold-forward positions erode last month, leading to thoughts that buyers willing to consider volume and able to offer “flexible” shipping could negotiate prices.
As it pertains to asking prices, the week started with most sellers adjusting their prices ideas by $1-$2 to bring them back in line with actual trading levels.
The majority of sources we spoke with reported a relatively uneventful week of trading. Several only saw a limited number of bids. Most had buyers aggressively bidding lower and packers, for the most part, reluctant to follow.
As to business concluded last week, even with a muted slaughter due to July 4 holiday, packers will be hard pressed to have their sales exceed the slaughter. Trading levels were easily a dollar lower across the board and in some instances even more, depending on the selection as well as the packer.
Elsewhere, it is unlikely that we will see large sales of wet blue hides when the USDA releases its weekly Export Sales Report. We hear of more-than-ample offers of unsold wet blue as producers continue to press perspective buyers for voluminous-type business for prompt shipment.
Reports from the cowhide trade claim a similar story. Overall, producers started the week with intentions of trying to hold prices steady and the majority of offers were in line with the week prior.
A source reported interest as disappointing and noticeably less than the week prior. In fact, by the middle of the week, it started to appear as if some producers were concerned by the lack of interest.
Prior to last week when perspective buyers were bidding lower than the asking prices, most producers were quick to counter at full asking prices. However, by the middle of last week, producers were taking much more time before responding to bids, while several appeared as if they were at least willing to “listen” to “reasonable” price ideas below their asking prices.
By the second half of the week, many sellers started to read the writing on the wall and willing to trade the market slightly lower. We are aware of sales down roughly $1 from their last established trading levels.
As to the number of hides exchanging hands, it is unlikely that producers cleared their production, leading to thoughts that we would see offer lists a little more populated this week.
THE LOOK AHEAD
We start a new week of trading and it appears that we have a two-tiered market. On the one hand, we have the big packer market that appears as if it is under pressure and there are packers very interested in prompt shipment on a number of selections and in sizeable volumes.
On the other, the cowhide market appears as if it is in better shape. However, any upside potential has dwindled, while many members of the trade would argue that producers are starting to show signs that their sold-forward positions are not as strong as they were last month.
Elsewhere, with the holiday behind us, we will see slaughter numbers well above levels of a year ago as a combination of more-than-ample supplies of live cattle (as supported by the recent Cattle on Feed Report) and the fact that cattle weights continue to run below levels of a year ago (report released week of June 24 claim steers’ weights are still 12lbs under a year ago, while heifers’ weights are 14lbs below levels of a year ago).
July is not known as a strong demand month for hides. If we were a producer we would continue selling into this market, especially considering that it appears we are in the midst of a correction in the big packer market and the cowhide market seems on the brink of price declines.
Share this story:
