US Perspective—13.12.11
13/12/2011
www.themaxfieldreport.com
Packers struggled to sell hides last week and the consensus of the trade is that packers did not liquidate their slaughter last week. In the meantime, tanners sensing packers’ struggle, made no secret of their efforts to test the wills of sellers and this resulted in a number of bids that were several dollars lower than packers’ asking prices. In the meantime, we are aware of some limited trading last week, albeit at lower levels and the sentiment of the trade is that trading levels were off roughly fifty cents a hide.
Numerous sources continue to report that producers of wet blue hides are pressing tanners for volume bids and with the perception of tanners that there is a large number of unsold wet blue
hides hanging over the market, those tanners with any interest in wet blue hides are bidding packers
aggressively lower. This is resulting in a plethora of rumours circulating in the market place and it is difficult to distinguish what is factual and what is not.
Packers who have seen hide prices slip by more than 7% since November 1 are not likely going to find any relief this week. Tanners who clearly recognise that packers are feeling the heat of this market are looking for revenge from some of the record prices they were asked to pay earlier this year and are taking dead-aim at lower prices. In the meantime, this week marks the start of about a two-week period where sellers will not be able to ship to China or Taiwan due to the Lunar New Year holiday (January 23, 2012). Meanwhile, with the market moving so much lower so
quickly, there are numerous reports of some tanners delaying their letters of credit openings and this has many producers holding more inventory than they were anticipating heading into this time of year. As far as offers this week, it is widely recognised that several of the packers were willing sellers of HTS last week as low as $78 delivered Asia, and suspect this level will be the best buyers are willing to pay this week. Unfortunately, for packers, popular opinion is that many do not possess strong sold forward positions and we suspect buyers with cash in hand and the ability to take immediate shipment may be willing to negotiate prices this week.
As for cowhides, although there are some producers who are insisting they had a decent week of sales last week, we are not confident that all of their competitors enjoyed the same. In our opinion, until producers of cowhides collectively as a group all enjoy a stronger sold forward position, those who are sold further ahead may have a little bit of success holding prices steady to incrementally lower, but we have our doubts about obtaining higher prices.
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