US Perspective – 14.5.13
14/05/2013
www.themaxfieldreport.com
Packers started last week with aspirations of holding prices steady with the week prior, while only officially offering just a handful of hides. However, by the middle of the week, agents for the packers appeared as if they were pressing anxiously for bids and this in turn encouraged more than a few tanners to submit some rather aggressive ideas last week.
Overall, interest last week appeared mixed at best. We had reports from some members of the trade who laid claims to seeing a decent amount of interest last week from various countries and traders; while we spoke with others who claimed they were not as fortunate and had only a few minimal bids to consider.
At the end of the day, it appears by mid-week sellers regulated themselves that if they were to sell hides they were going to have to be willing to negotiate prices and those who did were able to move a modest volume of hides last week at levels roughly a dollar under their last established trading levels. In the meantime, it appears for the most part that sellers walked away from a decent number of voluminous bids at levels several dollars under their asking prices and this is leading to speculation packers may see these bids again this week.
As far as trading levels last week, HNS traded hands at levels around $100, while packers desperately wanted to hold HTS/BBS prices at levels of $100; however, they appear as if they succumbed to levels of $99 by week’s end. We also heard reports of BS selling at $98 at the end of last week, while CBS exchanged hands at $96. Meanwhile, we continued to hear all week of more than ample offers of heifer hides; however, we’re not able to run-down any reports of trading.
In regards to trading today concluded over the weekend, we can share that regular weight BS sold at levels of $99, while super-jumbo BS sold at $105.50. Meanwhile, we also have sales of regular weight HTS at $99, while we also have packers laying claims to selling HNDC at $82.
Reports from the cowhide trade are similar to those of big packer hides. Producers started the week with aspirations to hold prices steady, while offer lists appeared a bit more populated due to the number of cows in the slaughter mix the past several weeks that have slaughter numbers up 115,000 head over levels of a year ago the past couple of months.
The week started out on a slow note; however, by mid-week it appears sellers recognised that they were going to have to be willing to negotiate prices, especially on HNDC that have been running at unseasonably high levels. Once word was out that sellers were willing to trade HNDC at levels close to $80, HNC at levels of $74 and HBC at $63 and it appears a modest number of sales concluded; however, sentiment of the trade is that it is unlikely a week’s worth of production was sold.
In the meantime, there was business concluded over the weekend and we have sellers laying claims to selling processor steers at their last levels with HTS at $96 and BS at $95. Meanwhile, the only other trading is a sale on HNDC that appear to be in decent supply with the seller sharing they sold at $80.
The look ahead
As to what we look for this week, buyers certainly are feeling as if the tide of momentum is slowly moving in their direction, especially after a couple of weeks of lower prices. In the meantime, slaughter numbers last week were the highest of the year, and with expectations that this week is likely to exceed last week (although barely), this is likely to encourage buyers still looking for hides to press for even further reduction in prices.
Meanwhile, producers in general are attempting to convey that they sold a decent number of hides last week and we tend to suspect that they may not be so inclined to accept another round of business at lower levels and are likely to be a bit more difficult when buyers attempt to negotiate prices this week.
In the meantime, there continues to be plenty of stories swirling through the trade claiming many tanners have higher-than-normal inventories of finished leather as reports insist that some leather buyers are delinquent in taking deliveries and, as a result, their cash flow is getting squeezed. In addition, there are rumblings of Chinese domestic demand for leather slowing.
That said, we would tend to think that tanners can ill afford to have hide prices decline too much as any significant decrease in hide prices is likely to trigger request from leather buyers to rescind agreements recently negotiated to raise leather prices. In addition, with it clear slaughter levels will not be as high as previous years, tanners might want to consider keeping a steady supply of hides coming into their facilities to ensure that they will not face any shortage later this year when slaughter levels move lower when demand for meat typically slows. The above leads us to suspect we are not far from reaching a trading plateau.
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