US Perspective—23.10.12
23/10/2012
www.themaxfieldreport.com
Opinions in the trade appear mixed as to exactly how many big packer hides were sold last week. According to the claims of some packers, they enjoyed another decent week of trading and this allowed them to book modest volumes at levels steady-to-incrementally-higher. Meanwhile, other members of the trade reported that selling hides last week at levels higher than the last established trading level was not an easy feat, leading some members of the trade to start questioning if the steady increase in prices we have seen the last several weeks may have finally run its course.
At the end of the day, we can share that HNS exchanged hands last week at levels as high as $88, while HTS and BBS sold at levels of $87, while we did have a few reports on HTS selling as low as $86. Meanwhile, sales of BS checked in at levels of $85-$85.50, while sales on CBS last week reached levels as high as $84, while our last reported trading on heifers has HNH at $75 and HBH at $73. Reports from various members of the cowhide trade was also mixed, as we had reports from some sellers with claims of enjoying an active week of trading, while we spoke to other members of the trade who shared that they were not as fortunate and had a relatively quiet week of trading, attributed to firm asking prices by sellers. As far as trading levels, we hear that HNDC sold at levels as high as $71, while trading on HNC reached levels of $63. We also understand that interest on HBC was not as robust as of the past few weeks; however, we know of trading out of the North at levels as high as $55, while sales on Bulls reflect $72.50 for NB and $64 for BB.
Looking into our crystal ball as to what we expect this week, although we are hearing of some downward pressure on hide prices in Europe and to a lesser extent on Brazilian wet blue hides, we do not look for producers in the US to blink an eye at the news of lower prices in other parts of the world. Meanwhile, as a group, sellers appear as if they are enjoying a comfortable sold-forward position on wet salted hides: however, we tend to believe that there are a handful of sellers who are riding on the coat-tails of those who are sold much further.
? ? In the meantime, there continues to be a rather large number of wet blue hides for sale and hanging over the market. The downside of these unsold hides is that they are likely to prevent packers from obtaining any appreciable increases on wet salted hides. On the other side of the argument, the relatively low slaughter levels that are running close to 5% under levels of a year ago are likely to prevent any appreciable decrease in wet salted prices if they were to succumb to any downward pressure. Therefore, we look for a “test of wills” this week between packers looking to eke out some incremental increases in prices, and buyers who would like nothing better than to see prices ease a bit and provide them with a little bit of breathing room.
Unfortunately, for buyers, the likelihood of prices easing this week does not appear in their favour. However, keep an eye on slaughter levels that are expected to be well populated with beef cows the next several weeks as we are in the middle of the fall cow run and this could create some problems for selling cowhides in the near term, especially if producers do not enjoy the sold-forward positions they have been advertising.
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