US Perspective - 22.05.12
22/05/2012
www.themaxfieldreport.com
Interest on big packer hides slowed considerably as we approached the end of the week. The vast majority of sources we spoke with confirmed that, if they had bids, these were much too aggressive compared to the ideas of packers. According to sources, tanners on news of packers being willing to accept less money have drastically adjusted their ideas. As an example, only ten days or two weeks ago, there were numerous reports from members of the trade claiming they could sell as many steers as they wanted at levels of $85 FOB for steers.
However, it appears those willing to trade at this level are finding few if any buyers as the ideas tanners have adjusted downward last week.
Reports from Asia claim ideas from tanners towards the end of the week were in the range of $90-$91 delivered for HTS and it does not appear as if packers have any interest in chasing these levels; however, there is speculation that a few traders may have taken this business. It still appears as if there is more than one of the packers pushing for sales of heifer hides and this is leading to a wide range of prices reported. Trading was reported a bit slower than usual at the end of the week. Sales we can attest to are regular weight BS checking in at $83, while we have multiple reports on heifers with trading ranging on HBH from $70-$72.50, while we have a single report on HNH at $72. We also have a couple of sales on HNS with lighter weights checking in at $84.50, while heavies are reflecting levels of $85.50, while we also have regular weight HTS reflecting levels of $84.
Members of the cowhide trade report a sluggish week of trading, as it appears the cowhide market is labouring much more than the big packer market. Sources share that there were more than a few sellers pressing for sales on HNDC, while we are told there were more than a few offers of plump cows this week. In the meantime, sellers attempted to try to hold prices steady; however, at the end of the day, it appeared there were more sellers than buyers and prices drifted lower in spite of slaughter numbers on cows that continue to trail levels of a year ago by a healthy margin. Interest on cowhides crawled to nearly a halt by the end of the week and this resulted in only a few isolated reports of trading today. Sales reported by processors are calling steer hides $81 for HTS and $80 for BS. Meanwhile the only other trade to share is a sale on Native Bulls at $72.
From our vantage point, it appears it is obvious the larger slaughter levels have thrown sellers a bit of a temporary setback as we suspect attempting to outguess the slaughter as we move forward will not be an easy task. In the meantime, there were doubts by some members of the trade who questioned if sellers were selling enough hides at what now appears to be the top of the market. In our opinion, sellers will have their work cut out for them over the course of the next few weeks, especially considering there is a reasonable chance the vast majority of sellers’ sold forward position sold at levels close to the top of the market, and we can only hope there is an orderly liquidation of outstanding contracts. Looking ahead to next week, we suspect buyers will be anxious to try to push prices lower. We are of the opinion buyers, to their surprise, are likely to find sellers (especially packers not willing to discount their prices any further) and it could very well be that we could see a rather lacklustre week of trading next week with prices flat.
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