US Perspective - 14.11.17
14/11/2017
www.themaxfieldreport.com
Packers entered last week buoyed with confidence following a strong week of sales. Some removed selections from their “public” offer lists, while others even opted to raise asking prices. Behind-the-scenes sources report they did not see any shortage of offers from packers, and that they were in line with the week prior.
As to interest last week, there were not as many enquiries as the week before. Some attribute this to a lack of offers, others blame firm asking prices, while others say packers satisfied the immediate needs of tanners the week prior.
There were not nearly as many hides exchanging hands, leading to thoughts that we will see a sales number this Thursday closer to levels of a couple of weeks ago.
In terms of prices, it appears packers met a considerable amount of resistance to efforts to raise trading levels, leading to thoughts that prices were no worse than steady.
Members of the cowhide trade report producers started last week with offer lists in line with the past few weeks, with most producers appearing as if their offer lists remained rather populated. Producers left prices unchanged in hopes of trying to counter bids from buyers. Interest appeared lacklustre once again.
Prices were $0.50-$1.00 lower than the previous week, while the consensus is that producers likely did not clear production.
THE LOOK AHEAD
We are in a two-tiered market, with big packer hides appearing on firm ground, while cowhides are in search of a bottom end of the trading range.
This is the last full week of trading before next week’s Thanksgiving Holiday in the States. Those looking to conclude business will have to get this taken care of this week, because most members of the US trade will be departing from their offices early in the afternoon next Wednesday (November 22) and many will not return until November 27.
Packers are likely to continue their firm tone this week, while laying claims to possessing strong sold-forward positions and not needing to sell. However, they might be overstating their positions, as we are still looking for the cancellations we talked about towards the end of last week to come back into play.
In addition, there are still issues with outstanding sales for some tanners and, with these tanners not taking shipment according to contract, we suspect some of the sales reported over the past few weeks are some hides being sold a second time.
Elsewhere, although harvest levels eased, we are of the opinion this is only a one week reprieve. We look for packers to “ramp-up” their volume this week, especially knowing that they will lose at least one day of production next week and the fact that beef demand remains strong and margins rather lucrative.
In addition, there are more than ample supplies of live cattle available for harvest and this leads us to suspect we will see numbers at least 4-5% higher than a year ago for the remainder of the year. Those selling cowhides will continue to hustle, as harvest levels are running at their highest levels of the year, coupled with continued reports that there are more than ample cowhides for sale in Europe, as well as wet-blue in Brazil.
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