Big packers’ trade offer lists were similar to the previous few weeks. Packers continued to limit offers, opting to offer just a handful of selections, and they continue to be bullish, raising asking prices by $1-$2 depending on the packer as well as the selection.

As to interest, potential buyers started the week bidding $1-$2 under the asking prices and quickly found packers unwilling to negotiate, countering bids at full asking prices.

Potential buyers submitting unsolicited bids found packers were unwilling to extend their already strong forward positions and were passing bids at the last traded levels to prices a dollar higher than levels on our price guide.

Elsewhere, offers of wet-blue hides reflected more than ample offers, lending support to the opinion that there are still a number of unsold wet-blue hides. One would not know there is unsold material, as asking prices reflect levels that would be equivalent to current trading levels on wet-salted hides plus their customary wet-blue charge.

In other news, we have spoken with a handful of producers who confirmed they are experiencing shipping issues as over the past two to three weeks they could not ship as many hides as requested as they simply did not have access to enough power. 

We find this interesting on two fronts, one: that some producers are able to ship hides earlier than contract in spite of laying claims to being so well sold forward; and two: during our tenure in the trade, we have always been a disciple that shipment are an excellent indication of leather business and clearly, leather business is better for tanners, as we do not subscribe to the argument that tanners are “loading up” on end-of-the-summer hides. 

Overall, most are calling interest last week modest, and sales were concluded at levels up a dollar or two, depending on the selection. 

The number of hides exchanging last week will more than likely fall short of the harvest and we will see a number on this week’s Export Sales Report very close to last week’s.

COWHIDE TRADE

Cowhide producers entered last week laying claims of being well sold and offer lists certainly supported these claims. 
Sources claim that most offer lists were a copy of the past few weeks with few, if any, new selections added. Producers, like their big packer counterparts, raised asking prices by roughly a dollar on all selections.

There appeared to be a fair amount of interest, especially considering the limited offers by producers. That said, like bids in the big packer market, many potential buyers started last week bidding $1-$2 under asking prices, while sellers were unwilling to negotiate prices and countered at full asking prices. 

Producers were also mirroring the actions of big packers when it came to addressing unsolicited bids, as these were dismissed by producers, regardless of price levels, as producers did not want to oversell their sold-forward positions.
Overall, the amount of business concluded last week is unlikely to set any records; however, in terms of prices, producers were able to see another week of gains. That said, it is highly unlikely that they sold a week’s worth of production.

THE LOOK AHEAD

In terms of harvest numbers, although we saw last week’s “knock” falls short of levels of a year ago, we need to keep in mind that carcass weights coming to harvest are running 29 pounds higher than a year ago - which on a tonnage basis equates to an “extra” 20,852 head of cattle, which packers must sell and it is a good thing that export demand is so strong. 

Producers continue to possess strong sold-forward positions and it is likely many producers have their strongest sales position of the year. Of course, it is likely we will see producers attempt to raise asking prices again this week; however, we need to keep in mind that increases were not as easy to come by last week, lending support to the argument that recent trading levels may be approaching the top end of the trading range.

We are not saying there is some downward pressure pending, especially keeping in mind how hard many customers are pushing to take delivery of their outstanding contracts and in many cases, well ahead of their contracted shipping times. 
We suspect producers would like to accommodate customers even more, but we continue to hear reports of a lack of equipment that is preventing producers especially in the north from shipping more hides.

For now, the market is definitely on firm ground and it will be interesting to see if producers are able to register additional increases this week

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