US Perspective—13.11.12
13/11/2012
www.themaxfieldreport.com
Interest in big packer hides slowed considerably at the end of last week. Based on our conversations, it appears interested buyers accepted the fact they would have to pay more for hides by the middle of the week and begrudgingly bought limited volumes. We are aware of some members of the trade who question if packers sold a week’s worth of production last week.
During the course of the week producers of wet blue hides made changes to their marketing strategies. The trade is well aware of the relative ease in selling wet-salted hides, as well as the struggles to sell wet blue. According to sources, producers of wet blue hides have begun a programme requiring prospective buyers of wet-salted hides to purchase one container of wet blue hides for every container of cured hides. As of this writing, we are aware of a handful of successful sales in Korea.
Reports claim sales at $95.50 delivered for cured HTS and BBS and $105.50 delivered for the same selection in the blue concluded. However, there are opinions by some members of the trade who recognise such efforts might be possible with Korean tanners, but question if Chinese tanners will be as accommodating. We have a couple of sales on regular-weight packer material ranging from $86-$87, while we had a couple of sales on Jumbo BS ranging from $90-$93 depending on the weight average. Other trading saw a packer trade Native Bulls at $74, while we also had a sale on regular weight packer HTS at $88 and lighter weight BBS checking in at $89.
We encountered mixed reports from the cowhide trade all week long. According to a handful of sellers, they continue to possess a strong sold-forward position and continue to try to lobby for higher trading levels. As of this writing, we cannot attest to sellers achieving higher trading levels for their hides; however, we know that they have not had to accept any less money, in spite of the fact the nation’s cow slaughter is currently running at its highest levels of the year.
In the meantime, we continue to hear reports from a number of sources that one of the major processors is aggressively pushing for sales in volume, especially on HBC. According to unconfirmed rumours, asking prices are easily a couple of dollars under those of competitors. Meanwhile, we are not hearing as many complaints about slow letter-of-credit openings on HBC and HNC and suspect that these issues might have been resolved over the course of the last week to ten days.
Tanners are obviously frustrated and find themselves struggling, not only from a profitability standpoint, but we understand sellers have recently become tardy on making deliveries of regular weight steer hides in the past couple of weeks. According to sources, it appears hides have changed very quickly over the course of the past two or three weeks, and weights are up as much as six to eight pounds versus levels during the first half of October.
According to sources, they are seeing long hair and many facilities have begun backing off their fleshing machines to accommodate hides that are similar to “winter” hides. In turn, this has several producers scrambling to honour sales of steers concluded several weeks ago with weight average well below 68 pounds, while resulting in an unexpected production of Jumbo-type steers, with some weight average exceeding 80 pounds.
As to what we expect for next couple of weeks, tanners face some difficult decisions, especially with prices of big packer steers approaching all-time record levels. At this time, tanners are struggling to command increases on new leather orders and struggling to make money. This leaves tanners to decide to continue chasing the market and likely push prices even higher, in hopes of obtaining increases on new leather orders. On the other hand, do tanners gamble and hope and pray that hide prices ease, despite forecasts that slaughter numbers will move even lower as we move through the balance of the calendar year and risk the chance of not being able to cover their needs?
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