US Perspective—25.09.12
25/09/2012
www.themaxfieldreport.com
Last week saw packers with asking prices roughly a dollar higher across the board. Asking prices on HNS reflected levels as high as $94 delivered, while prices on HTS and BBS were $93 delivered, BS at $92 delivered and Jumbo HTS prices threatened to exceed the $1,000 delivered threshold. According to reports, packers saw good interest to start the week; with several members of the trade of the opinion there was a good share of interest coming from traders. Popular opinion was that this was traders covering the short sales they made prior to the start of the All China Leather Exhibition in Shanghai at the start of the month. By the middle of the week, it appeared tanners had decided they too wanted to enter the market with interest coming from several different nations.
The consensus in the trade was that packers enjoyed a decent week of trading and many people we spoke with thought sales last week are likely to exceed the number of hides sold the past two or three weeks. Overall, prices were up roughly a dollar across the board and by the end of the week a couple of the packers were informing perspective buyers that they were finished selling for the week, while also informing customers to expect higher asking prices this coming week.
We found reports from members of the cowhide trade mixed last week. We are aware of a couple of producers who had offer lists that were noticeably larger than the last couple of weeks, while the majority of other producers had offer lists that for the most part did not appear any more populated than their last few offer lists. With regard to sales last week, we know of a couple of sellers who were laying claim to enjoying a decent round of interest last week. However, we are not aware of any sellers obtaining any substantial increase in trading levels with the exception of HBC, as it appears there was some decent interest on this selection allowing some sellers to achieve sales a dollar higher than the week prior. In the meantime, it appears there are more than ample offerings of HNDC hanging over the market, attributed to a large percentage of dairy cows in the slaughter mix because of low milk prices and a lack of hay due to the drought this past summer.
Looking ahead to what this week may hold, sellers’ forecasts that we would see a substantial reduction in the slaughter appears to have come to fruition last week. In addition, with packers looking at losses last week running close to $30 per head, coupled with box beef business exhibiting signs of labouring, we would not be shocked if the packers tweaked their slaughter numbers further and we saw a further slight reduction in the number of animals slaughtered this week.
That said, packers are laying claims to possessing a strong sold forward position and are indicating that if they decide to offer this week, they will ask more money. In the meantime, there are still more than ample supplies of wet blue hides unsold and one would think that with fewer animals being slaughtered that these producers would reduce the number of wet blue hides they are producing. That said, we tend to suspect any buyers looking for wet-salted hides this week may find their options somewhat limited, while we look for buyers’ negotiating power to be somewhat limited as well.
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