US Perspective—20.11.12
20/11/2012
www.themaxfieldreport.com
Big packers saw prices increase again last week allowing trading levels to reach new all-time record highs. Worth noting are reports from various sources claiming the number of buyers in the market the past ten days to two weeks is considerably less; however, it appears there is no question that there are still tanners who need hides.
In the meantime, although the vast majority of packers only had jumbo steers and super heavyweights on their offer lists, we understand “preferred customers” were able to buy regular-weight product, thus allowing packers to establish new all-time record levels.
Overall, there appear to be some questions over packers’ ability to liquidate an entire week of production; however, considering many packers are admitting to being “over-sold” on several selections, a week without liquidating their production seems trivial.
Meanwhile, with the Thanksgiving Holiday looming on Thursday, November 22, sources share that many of the packers had offers available to the trade from the start of this week. Unfortunately, the vast majority of offers appear as if they are a duplicate of last week’s and void of offers or regular weight HTS, BBS or BS, while there are plenty of offers of heavier weight hides.
The good news is asking prices are steady.
In the meantime, considering reports from members of the trade who have visited some of the packers over the past two or three weeks, the likelihood of negotiating prices lower with packers who have minimal inventories of cured stocks appears slim.
Reports from those participating on cowhides claim sellers were not as fortunate as big packers last week. Producers appear as if they failed to see the same level of interest, although sellers are far from admitting they experienced a slow week of trading. Overall, the consensus of the trade is that prices for cowhides were relatively steady last week.
Worth noting is that demand is exhibiting signs of improving, especially based on reports that furniture upholstery tanners overseas appear more active. However, as we are in the midst of the fall cow run, slaughter levels are running at their highest levels of the year and this is likely to be why producers have not been able to improve upon their last traded levels. Meanwhile, the number of bull hides in the mix is in decline, while demand remains decent. This is leading to more money paid on bulls over the last week to ten days.
Reports from Asia claim tanners outside of China are struggling to understand the strong demand from Chinese tanners. Many tanners who deal with the major brands are loudly complaining about a lack of profit, and this coupled with hide prices that appear as if they are rising each week, is raising the frustration levels for many tanners.
This will be a short-week of trading in the US as well as for slaughter. Traditionally, we will see one of the lowest slaughters of the year this week; while a good share of those who trade hides, are looking at only working three days this week. That said, we do not look for demand from overseas to take a break this week, and with the vast majority of packers in an oversold position, coupled with the fact few if any packers have any inventories of cured stock in inventory, we do not look for prices easing this week.
In the meantime, although producers of wet blue are conveying to the trade that they have enjoyed a couple of decent weeks of sales, popular opinion in the trade is that there are still more than ample unsold inventories. At the end of the day, those tanners in need of product who prefer not to buy jumbo or super heavy steer hides, may very well have to set their bias on wet blue aside and consider buying this excess production, especially if they are looking to have product arrive before the shut-down for Lunar New Year, February 10.
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