US PERSPECTIVE - 14.04.20
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Big packers started last week with a full complement of selections offered. Shipping times for more popular selections were for 2/2 May / June but less popular selections were still being offered for April / May shipment.
Many of the packers opted to leave asking prices unchanged, but one of the major packers lowered prices anywhere from a dollar to as much as three dollars, which was interpreted by the trade as an effort to bring asking prices closer to actual trading levels from the week prior.
As to interest last week, this much is for certain, there was not nearly as many bids as the preceding couple of weeks, although sources shared there was a considerable amount of “me too” bids from tanners looking to try and purchase hides at trading levels from the week prior.
There were also tanners who were looking to buy at levels lower than the last established trading levels and these perspective buyers quickly discovered that packers had no tolerance for trading the market lower.
Regarding sales, the widespread consensus of the trade is there were not nearly as many hides exchanging hands last week (easy assumption), while trading levels were steady.
The big news was reports of several packinghouses dealing with COVID-19 amongst their workforce. Some plants to closed temporarily, while others resorted to running their “A “shift employees on Monday / Wednesday / Friday and “B” shift employees on Tuesday / Thursday / Saturday.
As a result, harvest levels are running close to 20-25% lower than only a couple of weeks ago when we saw the largest “knock” of the year, while expectations this week we could see a number as much as 30% lower than this.
COWHIDE TRADE
Cowhide producers entered the week with offer list a bit shorter than the last few weeks, on the heels of some decent sales the two weeks prior. That said, there were still a number of producers who continued to have offer lists that appeared well populated, while as it pertained to shipping times, there were a couple of popular selections that appeared as if they were a little better sold, while most other selections offered were still available for prompt shipment.
A number of producers were willing to leave asking prices alone, hoping that decent sales from the past couple of weeks would be the spring-board needed to hold prices steady. There did not appear to be as many bids as the past couple of weeks, but there was enough interest to certainly establish a market.
As to trading levels, it appears prices ranged from a soft-steady to some lower grade selections trading a dollar lower, while volumes traded were certainly lower than the past couple of weeks. Sales concluded on Friday include, BRS bringing levels of $12, while sales on HNDC check in at $10. The only other sale is an HTS at levels of $12.
THE LOOK AHEAD
As we start a new week of trading, problems with COVID-19 are becoming a more pressing issue for the industry, as one of the nation’s largest meat plants this afternoon announced that they will now slow indefinitely (intention is for two weeks) due to a number of employees with CV-19. In addition, we have already seen two smaller meat plants temporarily close a week to ten days ago, while we are aware of a few larger plants that have their “A” shift working three days and their B shift working the other three day. As a result of the above, the harvest that reached as high as 676,000 head the w/e March 27 is likely on track to fall below the 500,000 head levels this week and for the record, our weekly guess for the harvest this week is 470,000 head, which is a 30% reduction from levels of three weeks ago.
Of course, we suspect the prospects of smaller harvest numbers will certainly tempt those selling hides to consider raising asking prices, especially considering it appears trading last week was as close to steady levels that we have seen in more than two months. However, that said, one only needs to look at the nine weeks of sales prior to the last two weeks to see that producers had roughly 1.75 million more hides produced than sold.
That said, we subscribe that given the current levels of demand, those selling hides have a good chance at holding prices steady this week - although we tend to suspect we will have producers who will reduce their offers, boasting of now possessing strong sold forward positions – which on paper, we will believe, but in reality, we continue question due to the above and considering the situation we have at retail, would continue to sell into this market.
