US Perspective - 29.11.11
Courtesy of The Maxfield Report
www.themaxfieldreport.com
The consensus in the big packer trade is that in spite of packer’s best efforts last week to hold prices steady with the week prior, that prices slipped roughly a dollar across the board. Several sources reported that packers were willing to trade HTS freely at levels as low as $74 FOB (or $80 delivered) late Wednesday afternoon and Friday of last week, while BS were also traded freely at level as low as $73 FOB or $79 delivered. In the meantime, opinions are mixed as to exactly how many hides exchanged hands due to the holiday.
We have heard reports that many of the hides sold last week were concluded for prompt shipment, while there are perceptions by some members of the trade that as prices declined through the week, the number of buyers increased. However, as many people who are attempting to pontificate a decent week of sales for packers, there are an equal number of the trade insisting packers struggled to liquidate even a reduced slaughter last week.
In the meantime, considering our last day of reporting was Wednesday last week, we have a few reports of trading that were concluded over our long weekend break. Sales reported today include sales of packer regular weight BS at levels of $72, while sales of jumbos check in at levels of $74. We also have sales of CBS reflecting $68 for lighter weights and $69 for heavier weights, while trading on HNS is reflecting $74 for lighter weight material and $75 for heavier weights. The only other trading to share is a couple of trades on HTS, as we have packers laying claims to selling at $74 for regular weight product, while sales of Jumbos is reflecting levels of $76.
Members of the cowhide trade are reporting a surprisingly slow week of sales last week after the vast majority of sellers had experienced several decent weeks of sales. Overall, it appears a number of producers decided last week that they were prepared to “draw the line in the sand” on accepting any lower prices and it appears buyers were more than happy to remain on the sidelines last week.
According to sources, the few hides that did exchange hands last week did so at steady to incrementally lower levels. We were able to round up a few reports of trading that was pending over the long-weekend as we were closed Thursday and Friday last week.
Worth noting is that retail sales during the Thanksgiving weekend climbed 16%, with shoppers spent $398.62 on average, up from $365.34 a year earlier, the National Retail Federation reported, citing a survey from BIGresearch. Web sales on Black Friday surged 26% to $816 million and 18% to $479 million on Thanksgiving Day, said ComScore, a Reston, Virginia-based research firm.
Meanwhile, consumer spending, which accounts for about 70% of the economy, grew at a 2.3% annual rate in the third quarter, the fastest pace of 2011 according to the Commerce Department. However, in the meantime, the nation’s savings rate fell, suggesting some consumers used their nest eggs to keep spending. In October, consumer spending rose less than forecasted as Americans used the largest gain in incomes in seven months to rebuild savings.
The look ahead
The decline in big packer hide prices last week caught many members of the trade a bit off-guard, especially with packers advertising a strong sold forward position and a holiday shortened week of slaughter. Now with the Thanksgiving Day Holiday behind us, we will have four full weeks of trading before the Christmas and New Year Holiday break.
Meanwhile, on a historic basis, December has never been known as a time where we see a “flurry” of leather orders. This coupled with reports that leather orders off somewhere according to 20-30% according to many sources, could mean we could be in for some “rough sledding” the two weeks leading up to Christmas when producers are unable to ship to Asia due to Lunar Holiday shutdowns.
Buyers in turn are telling us that that they are aware of a sense of urgency amongst some of the various producers in the States. This coupled with reports that hide sellers in Europe are much more aggressive to sell hides, and rumblings of large inventories of unsold product in Brazil, has the vast majority of sellers opting to remain on the sidelines, as there is no fear of not being able to secure adequate product once they decide to enter the market.
