US Perspective—09.10.12
09/10/2012
www.themaxfieldreport.com
Last week was nearly a non-existent week of trading for most members of the trade in terms of the number of hides sold (especially traders), as a combination of sellers’ comfortable sold-forward positions, coupled with Asia’s mid-autumn festival and the USHSLA annual convention in Chicago made for a lacklustre week of trading.
In the meantime, some packers reported that they enjoyed a decent week of enquires last week, which was surprising as most members of the trade suspected Asian tanners with prices well above $90 delivered on steers would take a more passive approach last week.
As far as trading levels are concerned, sources who participated in trading last week claim HTS/BBS sold at levels of $93, while sales on HNS reached as high as $94, while interest on BS reflected levels ranging from $92-$92.50. We understand there was also some modest interest on Jumbo hides with trading levels reported as high as $102-103.
However, worth noting are unconfirmed rumours towards the end of last week that there was business concluded on HTS/BBS at levels as low as $92, and reports very late last week indicating some of the larger traders may be holding on to large stocks of unsold product.
This, coupled with some of the negative economic indicators many are experiencing, has more than a few members of the trade of the opinion that we very well might be at the top-end of the trading range.
Early reports from Asia this week claim that tanners continue to lament about leather orders and the inability to convince their customers to accept increases in leather prices. In fact, there are claims by some tanners that if they cannot get their customers to accept increases on new leather orders moving forward those tanners insist that they will reduce their soaking levels as opposed to continuing to chase the market in hopes of better things to come.
Meanwhile, there is a lot of “market talk” about the large number of hides sold to Korea the past two or three weeks. Some members of the trade insist the purchases were by a couple of tanners who do not have the best reputation for taking delivery of their product. What is interesting are reports that the majority of these purchases were for big packer steers and according to sources, these same tanners are very slow in opening letters of credit for some of their older cowhide contracts.
Looking ahead to this week, the vast majority of the trade will be back in their offices with the exception of the European trade who will gather in Bologna this week for the fall edition of Lineapelle that will take place October 9-11. We look for sellers who continue to lay claims to comfortable sold forward positions to come out this week with asking prices unchanged from levels of a week ago. We also look for sellers to insist there is no real pressure for them to sell, especially with a slaughter at 620,000 head last week and expectations slaughter levels moving forward are likely to be as low if not lower.
In the meantime, although there were a few isolated reports of some product trading at rather lofty levels through the course of last week, there were plenty of questions raised by various members of the trade if these levels could be duplicated in multiple directions and in volume. Meanwhile, there were unconfirmed rumours towards the end of last week of some claims by buyers that they were able to buy at levels closer to the levels of a couple of weeks ago and will certainly be interesting to see how things play out this week.
One final point worth noting is that the weather has turned, and much of the US has been facing weather and temperatures that are more typical of November than of October. This weather follows a period of unseasonably warm weather and is likely to wreak havoc with animals, starting the process of animals producing their “winter coats”. Thereby significantly reducing the window many buyers usually have to buy their favourite “end of the summer hides”.
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