US Perspective - 02.06.20
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Last week got off to a sluggish start, delayed by the National Holiday at the start of the week. As a result, packers did not officially offer until Tuesday night (overseas) and Wednesday to members of the US trade.
Sources claim offer lists were mixed bag again. Pundits thought we would see offer lists more populated last week with harvest numbers rising. However, when lists were published, a couple of the packers had no wet-salted hides but had more than ample offers of wet-blue hides. Other large packers were reported to be offering selections of wet-salted hides, but not nearly as many selections as pundits were expecting. The most surprising thing about offers were reports of packers with offers of wet-salted hides raising asking prices by a dollar or two on some of tanners’ favourite selections, while holding asking prices steady on other selections.
By the middle of the week, there was a fair number of Chinese tanners entering the market and sharing their prices ideas. As expected, higher asking prices were met with a considerable amount of resistance from buyers, as none appeared to have any interest in paying more money, while most buyers were reported to be bidding at levels $2-$ lower than the last reported trading levels.
A sizeable number of perspective buyers refused to improve their price ideas when countered at full asking prices by packers, and these bids were finally resolved. We heard that after a considerable amount of back and forth between buyers and sellers, that there was finally business concluded at what most believe was steady levels, but it was clear that achieving this was not an easy task.
With regards to the number of hides sold last week, due to the short week of trading, packers will likely be hard pressed to equal their sales from the week prior, and it is unlikely that packers cleared their production. That said, with harvest levels likely to reach 600,000 head this week, we should see more offers this week.
Reports from the cowhide trade are similar to those in the big packer trade, as the week got off to a slow start and producers opted to wait and send offers out a day late. Offers appeared for the most part unchanged, most producers appeared to have a full complement of offers, especially with the number of cows in the harvest mix continuing at higher than normal levels due to unprecedented demand for 50% lean content.
Asking price were unchanged with the week prior, although we understand there was a producer or two who attempted to raise asking prices on a handful of selections. The number of bids picked up in the second half of last week, but there was not quite as much interest as the week prior. Most producers tried to hold prices steady, while there were some rumblings that lower grade selections were struggling to trade at their last reported levels, leading to unconfirmed rumours of slightly lower sales on these types of hides.
THE LOOK AHEAD
We will see harvest levels increase again this week and it is likely we will see the harvest around 600,000 head, the first time we have seen this many head since the end of March. Sales numbers have not been keeping pace with the increased harvest numbers, and it is highly likely we will see more hides for sale this week.
Producers will struggle with lowering their asking prices; however, we were hearing reports towards the second half of last week that many of the packers appeared as if they were a bit “chummier”, which is usually an indication that packers are looking to conclude some business and this has us wondering if we will see packers a bit more willing to negotiate prices.
