US Perspective - 9.1.18
09/01/2018
www.themaxfieldreport.com
Last week packers appeared as if they had no sense of urgency in regards to sharing their offers lists, in spite of the New Year holiday on Monday. When they finally offered either late Tuesday or early Wednesday, the majority appeared in line with last week, both in terms of the selections offered and asking prices. Packers who had not offered the previous couple of weeks continued to abstain.
As to interest last week, the majority of sources we spoke to reported a lacklustre week, and we are not aware of any members of the trade laying claims to enjoying much more than a limited number of bids, while quantities were also limited.
Buyers willing to share their price ideas found packers unaccommodating to prices lower than the last traded level and those few buyers still in need of hides found themselves with little choice but to pay steady levels to buy hides.
The number of hides exchanging hands last week fell well short of the harvest, even with the holiday at the start of the week, which continued a trend of 3-4 weeks of lacklustre sales.
In the wet blue trade, sales have been lacklustre for six to seven weeks. We are hearing some “rumblings” insinuating several producers of wet blue have accrued some inventory of unsold wet-blue and it will be interesting to see if we start to see offers here for prompt shipment in the near-term.
Meanwhile, reports from the cowhide trade also claim interest over the Christmas and New Year holiday slowed considerably after a nice improvement in the two to three weeks leading up to the holidays. Offer lists appeared in line with the past couple of weeks, both in terms of the number of selections offered as well as asking prices, while producers were slow to publish offers.
As to sales, there were only a limited number of hides offered, and producers were committed to steady asking prices. The Christmas and New Year Holidays also contributed to the lack of interest as many took advantage to take time off to be with their families.
THE LOOK AHEAD
There is a prevailing sense that producers have not sold enough hides during the past three to four weeks and this has caused sold-forward positions to erode. We are not aware of any producers that have hides for “prompt” shipment; however, we have heard from a number of reliable sources that buyers are not having any problem shipping hides.
Looking back over the past few years, there is always a decent round of interest from tanners in January. Many are of the opinion this is a push from tanners to ensure that they have adequately covered their raw material needs following Chinese New Year [February 16].
However, this year, many think tanners bought more than they normally would have in the fourth quarter and that interest for the first quarter will fall short of expectations.
USDA is reporting that carcass weights are on the rise. Om December 23, steer carcass weights were 903 lbs, which is 6 lbs higher than last year, while heifers were 12 lbs over last year with more heifers reported in the harvest mix.
Ideal feeding conditions in November / December have allowed cattle to perform better than expected this winter. Carcass weights are now above last year and are adding tonnage to beef supplies in addition to more head of cattle. This is important to keep an eye on as cattle weighing heavier than a year ago would translate into packers not needing to harvest as many head to generate tonnage. However, if we continue to see demand for US beef grow, while there are more than ample numbers of live cattle standing, it is likely this should result in harvest levels higher than a year ago, at least the first six months.
We look for offers this week to be a carbon copy of last week; however, we would not be surprised if we saw at least a handful of producers with a few more selections offered, and packers who had been refraining from offering showing a few hides for sale.
Share this story:
