US Perspective—12.02.13
12/02/2013
www.themaxfieldreport.com
Last week saw packers offer the more hides than at any time in the last couple of months, with some packers even offering hides for second half of February shipment. This in turn, sent some shockwaves through the trade and gave tanners a glimmer of hope that the recent upsurge in prices was perhaps behind them. The more-than-ample offers led to numerous rumours last week. We heard members of the trade insisting that some traders were selling regular weight HTS at levels as low as $99 delivered, while others were asserting that more than one of the packers were looking to sell regular-weight HTS in volume at levels of $100 delivered.
Meanwhile, packers continue to insist that they have more than adequate outstanding sales and with slaughter levels that finally dipped below the 600,00 head levels last week, and that all they were attempting to accomplish last week was to extend their sold-forward position.
At the end of the day, popular opinion is that hides exchanged hands last week at levels steady-to-slightly-under their last traded levels.
Meanwhile, worth noting is that even with the appearance that hides could be bought slightly cheaper last week, interest overall appears as if it were not enough to allow packers to clear even a reduced week of production, which was surprising as the consensus amongst producers was that there are still tanners in need of raw-stock.
We had comments by members of the trade that interest on BS appears to be a bit better than anticipated. We questioned some sources about this and were told that due to poorer-than-expected grading on HTS, that many tanners had been pursuing BBS and with offers of BBS now limited, tanners are turning their attention to BS.
Reports from the cowhide trade were not much different from those in the big packer market. Members of the trade were taken off-guard by how populated offer lists were last week, while asking prices for the most part appeared unchanged from levels of the week before. Overall, buyers made a strong effort to bid prices down; however, collectively sellers succeeded in fighting off the vast majority of lower ideas. Although prices were considered steady to slightly lower by most, it is agreed that it is unlikely sellers sold their production last week.
We look for a quiet week of trading with Asia out this week celebrating the Lunar New Year holiday. However, worth noting, that unlike when Europeans take their traditional summer holidays, many Asian hide buyers have their cellular telephones with them on holiday and it is always possible to conclude business if prices are “right”. In the meantime, it will certainly be interesting to monitor the activity of sellers this week, especially after many “broke the ice” last week, concluding business at slightly lower levels.
Meanwhile, there are still quite a few members of the trade harbouring opinions that the “lull” we are experiencing in the market will be short-lived. These members of the trade insist there are plenty of tanners who simply do not have all of their raw material needs covered. They point to the fact that the time following Lunar New Year is a busy time for most tanners, and any decrease in prices will easily be recovered in the second half of this month, especially with slaughter levels labouring around the 600,000 head level.
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