US Perspective - 17.9.19
17/09/2019
www.themaxfieldreport.com
Reports from the big packer trade claim offer lists were a bit of a mixed bag last week. Some entered the week in possession of offer lists that were much larger than the week prior, confirming suspicions that packers have not been selling enough hides the past few weeks to keep pace with the harvest. That said, a couple of the packers had offer lists that did not appear as if it were much different from the past few weeks.
Sources share that for the most part, asking prices were unchanged with the week prior, as packers eased their effort of trying to push prices higher every week. Several selections appeared as if they were able to ship a bit earlier than what packers had been advertising a couple of weeks ago.
Once again, the number of bids were disappointing, following a trend we have seen the past 5-6 weeks. Some blamed holidays in Korea and China, while others claim there are not enough leather orders to support the number of hides being produced every week.
As to trading levels, we are going to call them a very soft steady, although packers were clear they were looking to trade at steady levels, there were “rumblings” that a couple of the packers appeared as if they were a bit more willing to discuss prices.
As to the number of hides sold last week, those looking for voluminous type business were disappointed, as buyers were reported to be looking for limited quantities, while also attempting to bid prices lower. We had yet another week where packers failed to liquidate their weekly production and we suspect we will see even more hides offered this week.
Cowhide producers entered the week in possession of offer lists that appeared to have a full complement of selections, to include HNDC, which only a few weeks ago appeared as if they were sold well forward. Most of the hides appear as if they were for shipment within the next 2-3 weeks, with the exception of HNDC.
The producers left asking prices unchanged and attempted to negotiate with perspective bidders if and when they were willing to pass on bids.
The number of bids for most producers was disappointing, although one group shared they were blessed with a decent amount of interest.
As to trading levels last week, producers would like to call them unchanged with the week prior; however, we had the feeling that more than a few producers were willing to negotiate.
We are not aware of any voluminous type business and we agree with other pundits that it is unlikely that producers sold their production last week.
THE LOOK AHEAD
We are starting out a new week of trading and producers are likely entering this week with more hides for sale than they are willing to admit. As a result, we are likely to see offer lists much more populated and there may well be some “special” offers by some producers, especially considering we have seen some lacklustre sales for the last two months.
It will be interesting to monitor harvest numbers, especially on the heels of last week’s smaller-than-expected harvest of 629,000 head that caught many pundits off-guard. It is important to monitor the number of head processed the next several weeks, as reports claim there are a number of live cattle standing ready for harvest, while also claiming cattle appear as if they are heavier than a year ago, which could lead to a rapid increase in the number of heavier weight steer hides in the near-term.
If we are to see any change in prices it appears the upside potential for trading levels is minimal at best, while due to the lack of sales and continued reports of lacklustre leather orders, there appears to be a better chance that we will see prices drift lower before they inch higher.
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