US Perspective - 27.8.19
27/08/2019
www.themaxfieldreport.com
Reports from the big packer trade claim packers entered last week enjoying decent sold forward positions and backed these claims up with some packers not publishing an offer lists, while other packers who published offers only had a few miscellaneous selections to offer.
As it pertained to asking prices, packers were not bashful and continued to offer at no worse than steady levels, while some packers attached some incremental price increases to their offers.
We are not aware of anyone enjoying a busy week of trading. In fact, a common theme was interest appeared to be in line with the previous couple of weeks, leaving most pundits of the opinion we would likely see an Export Sales Report this Thursday in line with the past couple of weeks.
There were a number of perspective buyers who started last week with price ideas that were running roughly $3-$4 lower than asking prices, with opinions of pundits that this was buyers’ way of testing the sold forward positions of packers following a couple of weeks of sluggish sales. However, to their surprise, packers showed no signs of negotiating and business concluded last week did so at no worse than steady to slightly higher levels.
As to the number of hides exchanging hands, it is highly unlikely that we saw packers liquidate their production and if this is indeed correct, it would mark the third consecutive week we have seen lacklustre sales. We could see large offer lists as we move forward.
Reports from the cowhide trade claim that most producers entered last week in possession of unsold hides, leading to offer lists that appeared as populated as the past several weeks. That said, we continue to hear most lists are dominated with offers of HBC and HNC, while there were even a few more offers of HNDC.
Overall, producers remain stubborn, refusing to lower their prices ideas, insisting that if they accept any lower levels of some selections of cowhides, it does not make sense to retain the hides and likely would add these to the list of hides already being disposed.
Most sources are calling interest sporadic, while overall, there is simply not enough interest for all of the hides being produced each week.
We are not aware of any members of the trade laying claims to enjoying a decent week of sales, as it remains difficult to conclude business and highly likely we did not see producers clear their production. There is a strong possibility that we could see producers who are traveling in Asia have some “special” offers for customers and likely for prompt shipment.
THE LOOK AHEAD
As we went to press Friday afternoon, there were some pundits in the big packer trade starting to question the sold forward positions of the packers. However, President Trump’s announced an increase in tariffs that would include hides from December 15, means it is likely tanners will enter the market in the coming weeks to ensure they have delivery prior to December 15.
That said, we are still very interested to see the offer lists of packers this week, as we agree with other members of the trade that sales for packers the past 2-3 weeks have been poor, and suspect that their sold forward positions are not quite as strong as they were at the beginning of the month. In addition, we are also interested in hearing reports from those who are travelling, as this will provide us a firsthand account and another perspective on how business is for tanners.
Meanwhile, those selling cowhides will continue to have their work cut out, as we are of the opinion sellers possess sold forward positions that are far from ideal, while producers are making their best effort from taking lower prices, in light of harvest numbers of bulls / cows that are not exhibiting and sign of easing.
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