US Perspective—30.04.13
30/04/2013
www.themaxfieldreport.com
Last week finally saw prices of big packer hides stop moving higher. Popular opinion in the trade is that prices likely peaked last week, which resulted in packers losing some of their momentum. This coupled with slaughter levels during the 2Q of 2013 that are running slightly above levels of last year, led to reports of hides exchanging hands at slightly lower levels.
There continue to be reports from various tanners insisting that leather orders have slowed considerably following APLF at the end of March, and this, coupled with tanners insisting that they are now starting to accrue inventories of finished leather, is lending support to “bears” who are looking for a correction in prices.
Over the course of the past week, we have reports of traders accepting prices as low as $105-$106 delivered for HTS, while packers were a bit more rigid insisting on $107-$108 delivered depending on the port. Meanwhile, trading on BBS last week saw levels of $108-$108.50 delivered, while there were unconfirmed rumours they could be bought for less than this. We also heard that HNS sold last week at levels close to $109-$110 delivered, while we also heard of some HBH selling at levels close to $93-$94 delivered.
Reports from members of the cowhide trade are paralleling those in the big packer trade. Producers started last week with hopes of holding prices steady; however, by mid-week it became apparent that there were more than a few sellers looking to sell hides. This led to reports of most elections trading down at least a dollar across the board, while there are unconfirmed rumours of some sales concluded quietly for some larger volumes that are as much as $2 or slightly more under the last traded levels that we could not confirm.
As to what we expect this week, we tend to believe we could see a very lacklustre week of trading, especially with much of Asia off early this week celebrating their May Day holiday. We also tend to suspect now that tanners have seen some vulnerability from producers in the form of lower prices; we would not be surprised to see tanners try to push for even lower prices again this week.
The key in our opinion is the amount of business that could not be concluded the past two or three weeks due to prices from buyers being much lower than where producers were willing to accept. We are of the opinion prices are in transition, but we do not agree with those members of the trade calling for some radical correction in prices.
Share this story:
