US Perspective—05.03.13
05/03/2013
www.themaxfieldreport.com
Last week the bigger packer market yielded some mixed results. Overall, most sources reported a sluggish start to the week. However, by the time Thursday rolled around, we understand that interest improved and many members of the trade are laying claims that it is likely packers were able to move a week’s worth of production.
We found it interesting last week that reports claim that interest was not evenly spread. We encountered mixed reports from traders with some sharing that they did not experience a busy week of trading, while other traders reported that they were pleased with the amount of interest they saw. When speaking with packers, it appeared they had no shortage of interest.
As far as trading levels were concerned, buyers made a strong attempt to try to push prices lower to start the week; however, sellers failed to follow their ideas and adhered to their asking prices. Overall, prices for the most part were no worse than steady, while there were instances where sellers were able to eke out incremental increases for BBS and HNS.
With regard to cowhides, sources report that after a slow start to the week and buyers attempting to try to bid prices lower, sellers were able to conclude some business towards the end of the week. With the number of cows in the slaughter mix at what should be some of their lowest numbers of the year, sellers were reluctant to sell hides in volume last week.
Sources overseas share that interest certainly picked up towards the end of last week, especially from Chinese tanners. Consensus in the trade is that tanners had aspirations of buying hides lower; however, they quickly found sellers unwilling to participate and only those buyers willing to improve their ideas closer to the asking prices of sellers were able to secure hides last week.
In the meantime, we have heard unconfirmed rumours that one of the major luxury brands concluded a deal for 3 million square-feet of leather with a well-known split-leather tanner in Asia. According to the rumour, the contract calls for a heavy embossed product and if this rumour is indeed correct, it only supports comments we have heard from many members of the trade that everyone is attempting to source material that is affordable.
As to what we expect this week, we do not look for much of a change from sellers. The vast majority of those producing hides continue to lay claims to decent sold-forward positions and with slaughter levels that are likely to remain below 600,000 head, there certainly will not be any pressure on packers to sell in fear of falling under the weight of their own unsold inventory.
In the meantime, we also look for offers this week to be noticeably less than last week’s, assuming the vast majority of producers will want to hold off sales this week in order to ensure those traveling to Asia to visit customers prior to the start of the APLF fair in Hong will have product to sell.
Considering we are three weeks away from APLF, hide prices that are at all-time record levels and the fact that we will see parties travelling in Asia in the next week to ten days, we have doubts if tanners will be looking for product in volume this week. Rather, we believe those tanners who are in need of raw stock may be tempted to wait to see the numerous people who will be travelling over the course of the next two or three weeks in the hope that some might have some favourable offerings.
Meanwhile, what will also be very interesting to get first-hand reports of from those travelling will be the inventory levels of tanners. There are plenty of tanners attempting to convey that they are reducing soaking levels this month.
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