US perspective – 23.4.13
Courtesy of The Maxfield Report
Last week saw the end of an impressive seven week run-up in big packer hide prices that saw packers add almost $7 a hide to prices which equates to an almost 8% rise in hide prices. The majority of sources we spoke with reported a relatively uneventful week of trading last week and popular opinion of the trade is that it is very unlikely that packers cleared their slaughter.
Meanwhile, the consensus of the trade was that prices were no worse than steady, while it is also agreed it appeared traders were much more active compared to packers, with popular opinion of pundits that traders were likely attempting to liquidate their remaining long positions.
In regards to trading levels, asking prices on HTS / BBS that started the week with asking prices in the $109-$110 delivered neighbourhood could be bought in several direction as low as $108 delivered. Meanwhile, we are aware of reports of HNS still trading as high as $112 delivered last week, while BS were rumoured to be able to be bought at levels of $107 delivered by week’s end.
Reports from the cowhide trade are not much different from those in the big packer trade. Overall, sources report that for the second consecutive week demand slowed considerably compared to levels prior to the Asia Pacific Leather Fair [at the end of March]. Meanwhile, producers appear unfazed by the general lack of demand and insisted on no worse than steady prices last week. Worth noting is that popular opinion of pundits is that for the most part the few hides that exchanged hands last week did so at the previous trading levels, although popular opinion of the trade is that it is highly unlikely producers cleared a week’s worth of production.
As it appears the weekly rise in hide prices has taken a break, this sets up in our opinion an interesting week of trading for this week. From our vantage point, we are aware of a number of producers who had been some of the biggest of the bears laying claims to strong sold-forward positions and this, coupled with pending reduction in slaughter levels, was going to push prices higher. However, when speaking to these “bulls” at the end of last week, it did not appear to us that they had nearly as much conviction in their voices.
Meanwhile, it is worth noting that over the course of the past two or three weeks there was quite a bit of interest that was not concluded, leaving us the opinion there is still a number of tanners who need hides and likely, this will prevent any major correction in prices, if there is to be one.
In the meantime, members should keep an eye on slaughter levels as they are slowly increasing. Also worth noting is that although last week’s USDA export figures were much larger than anyone expected, if you average the last four weeks out, it is clear that producers have been slowly watching their sold-forward positions erode away. That is why we believe that buyers may just have a little bit of room this week to negotiate prices, while we would not be surprised if offer lists were a bit more populated this week.
