US Perspective—15.01.13
15/01/2013
www.themaxfieldreport.com
The first couple week of trading in 2013 have resembled the last quarter of 2012, with big packer and cowhide prices continuing to find enough support each week to allow sellers to improve upon their last traded levels. The initial perception of the trade is that reduced supplies are driving this market to record levels. However, we tend to side more with those pointing to better-than-expected demand from a wide range of tanners from a number of different countries who appear as if they have no choice but to be more aggressive in order to ensure that they secure enough hides to continue operating.
Last week actually started out a bit sluggish according to various sources we spoke with and, by Wednesday afternoon, there were more than a few members of the trade leaning toward the opinion that perhaps prices had finally run their course. However, by Wednesday evening or Thursday buyers who needed hides revealed themselves. By the time the week was over, packers and processors had moved a satisfying number of loads at more money.
Sales last week on a delivered basis are indicating HNS sold as high as $103, while sales of BBS were reported to have sold as high as $102. Other trading levels are calling sales of HTS as high as $101, while both BS and CBS were sold as high as $100. Meanwhile, sources are laying claims to better-than-expected interest on cowhides; however, trading levels appear a bit more vague than sales of their grain-fed cousins. Sources are indicating that HNC saw strong interest with buyers paying as much as $82 delivered, while sales of HNC were somewhere close to $74-$75 delivered and HBC sold in the neighbourhood of $65 delivered. Worth noting is that supplies of bulls are tight, while demand is reported as very strong and this allowed sellers to improve on their last reported trading levels by several dollars.
As to what we expect this week, no doubt sellers have plenty of confidence. Slaughter levels are expected to be somewhere close to 3%-4% lower than levels of a year ago, and this coupled with the fact most producers are laying claims to be sold through the month of February, if not longer, there is no real sense of urgency on the behalf of sellers to sell this week.
In the meantime, although there is plenty of literature and chatter about the strong reduction we are “supposed” to see in 2013, we remind our readers that pundits were pontificating a strong reduction in slaughter for the second half of 2012. Truth be known, the reduction we actually experienced in the second half of 2012 was not as severe as the reduction in the slaughter we experienced the first half of the year.
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