US Perspective - 23.4.19
23/04/2019
www.themaxfieldreport.com
Most packers entered the week appearing as if their offer lists were much more populated, and one of the packer’s lists apparently had doubled versus the week prior. Most had a full complement of selections, and there were considerable volumes of hides for sale.
In addition, shipping times frames confirmed suspicions that many selections were available for prompt shipment, as there were selections offered for April shipment (prompt), while some others were offered for April / May shipment (technically also prompt). We were not aware of any selections offered only for June shipment, which would indicate stronger sold-forward positions.
Last week could possibly be one of the poorest weeks of sales we have seen in quite some time. Several sources reported to either not having a bid, or only having a few miscellaneous bids, while another common theme was few buyers were willing to submit bids that had any substantial volumes attached.
Buyers willing to share their price ideas continue to bid aggressively lower and when packers attempted to counter bids a dollar under their “official” asking prices, we understand a sizable number of buyers withdrew, as opposed to improving their price ideas and meeting part way.
Packers will be hard-pressed to lay claims of selling their production and this is not good news, especially considering that we saw the largest harvest of the year last week with 641,000 animals meeting their maker.
As to trading levels, packers would like the trade to believe prices are no worse than steady; however, if you are going to sell any hides, sellers will have to negotiate.
COWHIDES
Reports from the cowhide trade are like those from the big packer trade. Producers appeared to have a full complement of selections.
Most producers opted to lower prices roughly a dollar across the board; however, even with the decrease in asking prices they were still higher than the week prior. Most selections appear as if they are available for prompt shipment, as we are not aware of any selections that were offered for June shipment only.
There were not nearly as many bids to consider compared with two to three weeks ago, while the few bids shared not only reflected aggressively lower prices but were also for minimal volumes.
Last week was a sluggish week of trading and it is unlikely that producers cleared their production.
THE LOOK AHEAD
Members of the trade are hoping to see more interest (bids) this week. Historically, this is the last week we should see harvest numbers in the 630,000-640,000 head levels. May 1 usually signals the start of the summer harvest schedule and considering that last week’s Cattle on Feed Report showed we have the largest number of cattle standing since the series began in 1996, we suspect we will soon start seeing numbers in the 645,000-660,000 head range on a regular basis.
Meanwhile, due to the sluggish sales of last week, we suspect we will see offer lists even more populated, and those selling hides will have to be willing to negotiate prices. However, the larger question is looming: is there enough demand to absorb the hides being produced?
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