US Perspective—12.03.13
12/03/2013
www.themaxfieldreport.com
The big packer market firmed again last week on the heels of decent volume, especially from China. Multiple sources reported a very active start to the week and by mid-week packers were laying claims to selling a decent number of hides and levels roughly a dollar higher than their last established trading levels.
Overall, popular opinion in the trade is that it is likely packers sold a week’s worth of production with trading levels as high as $103-$103.50 for BBS and $102-$102.50 for HTS. HNS sold as high as $104-$105, while trading levels on BS last week check in at $101-$101.50.
As the start of spring is next week, the number of lighter-weight hides is increasing rapidly, as sources shared there were noticeably more offers of heifers last week with trading levels close to $89-$91 delivered, depending on weight and origin. Meanwhile, there were fewer offers of Jumbo and Super-Jumbo steer selections.
We do have a couple of reports of trading pending from the weekend as we have sales of regular-weight packer HTS at levels of $95 and processors reporting they sold at $92, while we also have sales of heavier-weight BBS reflecting levels of $96.
Interest on cowhides last week, although perhaps not as brisk as interest on big packer hides, was enough to allow sellers who possessed strong sold-forward positions to take advantage and improve upon their last traded levels. Overall, upholstery tanners in China led the charge and were willing to pay more for HNDC and HNC last week, while producers of HBC also reported enough interest to allow them to obtain more money as well.
Reports from overseas last week claim Chinese tanners in general continue to lead the interest on all hides, appearing as if they are prepared to pay asking prices. Meanwhile, demand from Taiwan and to Korea has dwindled in the past few weeks, as tanners in these countries insist that they are reducing soaking levels claiming they cannot follow current trading levels.
Numerous Korean tanners are reported to be operating for the last several weeks at only 33%-50% of capacity. In addition, Korean car production, export and domestic sales substantially dropped in February. To compare with the same period last year, Korean car production was 338,278 for the month, down by 19.8%. Exports were 234,161 cars, down by 21.9%. Domestic sales at 110,090 cars were down 10.3%. Exports to the US were still okay, but exports to Europe dropped substantially.
We look for producers this week to have limited offers, if any, especially with those producers who already have people in Asia visiting customers prior to the start of the APLF (March 25). We suspect those with offers will have no reason to lower their ideas and it will be interesting to see if they are content for steady levels or if they attempt to try to push prices even higher.
In the meantime, it will be interesting to hear reports from those traveling; we continue to hear reports of how some tanners have reduced their soaking levels, while we also look forward to travellers being able to confirm speculation that there are more than a few tanners who are short-bought and are in need of replenishment. It will also be interesting to observe what those travelling will be offering as it should give us an excellent indication as to producers’ exact sold-forward positions.
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