US Perspective - 22.11.11
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Popular opinion of the trade is that big packer hides traded anywhere from steady to incrementally lower last week. In the meantime, it is widely agreed that it is likely that packers did not liquidate the 475,000 head of cattle they slaughtered last week (636,000 total slaughter minus 161,000 head of cows and bulls).
We did have a few isolated sales pending over the weekend with multiple reports of trading on BS as we have sales of regular weight packer BS ranging from $70-$73, while sales of Jumbo BS check in at $75. The only other sale was a trade on regular weight packer BS with trading at $75.
Looking ahead to this week, although it is a short work week in the US, packers do not appear to be in any hurry to offer, and those looking for offers this afternoon appear as if they will be disappointed. In the meantime, expectations by the trade are that packers are likely to come out with offers unchanged from levels of a week ago.
We heard mixed reports from members of the cowhide trade last week, as we have reports from some producers laying claims to a busy week of trading, while other members of the trade are reporting a relatively uneventful week of trading. There are members of the trade sharing that with HNDC prices decreasing the past few weeks that there was better interest on this selection last week, while there are also reports of decent inquires on HNC. In the meantime, it still appears as if there are more than reasonable inventories of unsold HBC hanging over the market. As far as prices last week, although there are some members of the trade of the opinion cowhide prices were no worse than steady and even calling prices incrementally higher, our weekly TMR Cowhide Index is calling prices off by a quarter last week.
We also picked up some trading today that was concluded this weekend as we have processor steers reflecting levels of $70 obtained for HTS and $68 for BS. Other trading shared with us today includes a sale on HNDC at levels of $62, while we also have HBC in the North reflecting levels of $43.
The look ahead
This will be a short workweek for the US trade with the holiday on Thursday. We look for much of the trade to depart their offices early in the afternoon on Wednesday and many will also take Friday off this week as well. In the meantime, it is still a full week of work for tanners overseas and with the use of cell phones and e-mail; business still will take place this week.
Looking ahead to this week, there is no question that tanners realise the pendulum of moment is pointing in their favour and we look for buyers to continue to press sellers for lower prices. In the meantime, we have our doubts that sellers collectively possess the sold forward position as many are advertising. Then, if you also consider the problems sellers are experiencing with buyers who are attempting to avoid opening their L/Cs on older, more expensive orders, this unfortunately, draws sellers sold forward position in even further.
In the meantime, we continue to hear that new leather orders remain at a premium and according to various sources, it appears business is off somewhere close to 30% compared to levels of a year ago and why we remain of the opinion that your first sale may very well be your best sale for the time being.
