US Perspective - 29.05.12
29/05/2012
www.themaxfieldreport.com
Interest on big packer hides slowed towards the end of last week, as it appears those who needed hides took care of business mid-week and the only bids left for packers to consider were buyers who were only offering “test bids” to gauge the sold-forward position of packers. This coupled with the fact it was a long weekend for members of the trade in the US (Memorial Day, Monday, May 28), resulted in many people departing for the long weekend early and few people available to speak to by the middle of the afternoon.
Meanwhile, packers are sharing with members of the trade that they have seen some decent interest this week. However, if we look into this comment a bit more deeply, we are of the opinion there was plenty of interest at levels $2-$3 or more below official asking prices, while the amount of interest closer to asking levels would be called, at best, modest by most.
As we recorded lower trading levels all week long, this has led to plenty of rumours swirling through the trade that we were note able to confirm, led by claims from some tanners that they were able to buy HTS/BBS below $90. As of this writing, our sources are telling us none of the packers have sold at levels lower than $90 delivered, while refusing all bids at levels lower than $90 delivered and bids lower than $84 FOB.
In regards to how many hides exchanged hands this week we are finding mixed opinions. Some members of the trade claim that because sellers were reluctant to accept less money earlier in the week they missed a chance to move a decent volume of hides. However, we tend to agree with those who think sellers had a better week of sales than most are giving them credit for as we think packers sold a decent number of hides directly to tanners this week.
We were surprised by this week’s slaughter as it checked in at only 636,000 head, well below the 650,000 head that was predicted by several pundits, including The Maxfield Report. Next week, we suspect we will see something well below the 600,000 head mark as the US will observe a holiday on Monday. This, coupled with the fact that packers have been advertising that they continue to enjoy a strong sold forward position, makes us wonder out loud why packers were so willing to trade hides at lower levels this week.
Our second thought is that we continue to hear from numerous sources that many packers are able to ship hides much more quickly as the month ends than they were when the month began. We recognise that we have seen a modest increase in slaughter throughout the month of May; however, the increase is well short of historical increases we would see during the month and this makes us question exactly how well sold some of the packers actually are.
Looking ahead to this week, as trading levels have now reached the $90 delivered level, we would not be surprised if packers “dig in their heels a bit”, especially with a short week of slaughter. That is why we believe those looking for additional declines this coming week may be a bit disappointed as we doubt packers will have any interest in trading the market lower. That is why we expect the ideas of buyers and sellers to be too far apart and for this likely to be a quiet week of trading.
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