US Perspective—04.06.13
04/06/2013
www.themaxfieldreport.com
The big packer market reached a bit of an impasse last week. Fundamentally we are not sure the market really changed that much; however, buyers who thought they had prices on a downward run, found packers’ offer lists last week a bit less populated and packers much less willing to negotiate prices.
At the end of the day, sources share that it appeared a busy week for traders as the speculation by the trade was that many traders were busy covering short sales, while direct interest from tanners last week paled in comparison to the past couple of weeks.
As far as prices were concerned, we call prices no worse than steady with the week prior, while we are aware of a few isolated incidents where sellers were able to lay claims of achieving some incremental advances.
As far as volumes are concerned, there is not a consensus in the trade. Some have insisted there were not many hides exchanging hands, while others insist packers sold a week’s worth of product.
In regards to prices last week, HTS sold in a range from $97.50-$98, while BBS sold at $98-$99, while sales on HNS reflected levels of $99-$100. BS sold at $97-$98, while CBS sold at $95, while sales on heifers were still reflecting sluggish levels with HNH at $83 and HBH at $81.
In the cowhide trade, members of the trade also have mixed reports. The majority of those selling hides are laying claims to enjoying a decent week of interest, especially towards the end of last week, and many of these same producers are leaning towards opinion that prices have not bottomed. In the meantime, we have heard from other producers who are insisting that they had a relatively uneventful week of interest and were disappointed with sales last week.
Overall, last week saw sellers with offer lists that were noticeably not as populated as the last couple of weeks were. Sellers who had started to become accustomed to lower prices over the past several weeks, entered the week with thoughts that they would continue to press for lower prices. However, by mid-week, it was apparent that sellers were not willing to cooperate and from our vantage point. We would call prices close to steady, with a few isolated reports where there were opportunities to squeeze desperate buyers for incrementally higher levels.
As to what we look for this week, we expect sellers to continue to try to convey a message that the hide market has bottomed out, coupled with insistences there are still more than a few tanners who are in need of product. Meanwhile, many sellers are laying claims to mending their sold-forward positions in the last week to ten days and only time will tell if these claims are correct.
In the meantime, other than the holiday-shortened week last week, overall, there really has not been any real significant development in the market place over the course of May other than we are in the midst of tanners’ slow season, while we are in the midst of the busy season for packers.
There are two wild cards that we believe need to be addressed. The first is that sources are sharing that there was an extremely large amount of interest last week, although not all of it could be concluded. Could this interest be interpreted as tanners being short of hides or possibly attempting to average down their higher priced inventories, as reports about leather business for the third quarter appear “murky” at best?
The second wild card in our mind, and probably not a major factor, is how accommodating producers were about selling at lower levels the two weeks prior to last week. Could this have been sellers being creative and allowing some of their best customers to average down some of the hides they bought at the top of the market, or perhaps for sellers away of attempting to ensure they continued receiving letters of credit openings?
Whatever the explanation the stage is set for an interesting week of trading this week and with both buyers and sellers strong in their convictions about the market, it will be interesting to see which side blinks first.
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