US Perspective - 20.8.19
20/08/2019
www.themaxfieldreport.com
Packers entered the week in possession of strong sold-forward positions. As a result, offer lists were noticeably smaller, with many of the more popular selections not available.
Offer lists contained many less popular selections, and prices ranged from steady to the week prior to roughly at least a dollar higher.
As it pertains to sales, it appears a combination of a lack of offers, coupled with higher asking prices and the ongoing trade war between the US and China, kept most tanners on the sidelines. The number of bids will be hard-pressed to exceed the week prior and with some buyers still out looking for bargains, this week’s USDA Export Report could be very similar to last week.
Overall, the consensus is that although there were not many hides exchanging hands last week, it packers have a bit of momentum on their side and it will be interesting to see their offers when traveling towards the end of this week.
In the meantime, it is likely we will see another week of limited offers from packers, as we suspect they will opt to keep hides available for those who will be travelling.
Elsewhere, members of the cowhide trade claim offers were a carbon copy of the past few weeks, as the majority of offers seen listed more than ample numbers of HBC and HNC for sales. Offers of HNDC were not nearly as plentiful as many producers possess decent to strong sold-forward positions on this selection.
Producers opted to leave asking prices unchanged with the week prior, while HBC / HNC are still available for prompt shipment.
Buyers continue their attempts to bid prices lower, while producers continue to refuse to trade any lower than their last sale. We also have heard that any attempt from producers to raise prices of HNB / HNC are being met with a considerable amount of resistance from prospective buyers.
Overall, last week was not a busy week of trading, while there are unconfirmed rumours of some sales concluded quietly on HBC / HNC at levels that would be lower than levels listed on our price guide.
Harvest levels that appeared as if they were easing the week prior picked up again last week and we suspect this has to do with the newfound profitability in the market for those harvesting animals.
THE LOOK AHEAD
With regards to harvest numbers, packers were able to redirect production, while competing packers also ramped-up their production. That said, we question if packers can continue to harvest 75,000 animals on Saturdays due to a tight labour market and this week will be a good indication of their intentions.
Meanwhile, we suspect most producers will refrain from offering many hides, opting to hold back offers to allow those who will be traveling to have hides to offer. It does not appear as if those selling cowhides are getting much relief in terms of higher prices and it will be interesting to see if they are able to hold prices of HBC / HNC steady.
We remain of the opinion that leather business for better quality hides is better than a year ago and this, coupled with European tanners returning from their holidays and the All China Leather Exhibition in a couple of weeks, has us still leaning towards the opinion that if we are to see prices of big packer hides change, they will probably go higher as opposed to lower.
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