US perspective - 18.06.13
18/06/2013
www.themaxfieldreport.com
Last week certainly provided us a mixed week of trading. Packers started the week with offers unchanged from their higher asking prices from the week prior, while the vast majority of Asia was celebrating the Dragon Boat Holiday for three days at the start of the week, and buyers in general did not appear as if collectively as a group they were “onboard” with ideas that prices were firmer.
As expected, the week started out on a relatively slow foot and as we approached the end of the trading week, it certainly appeared from our vantage point that at least some of the sellers were starting to second-guess their efforts to raise prices. By week’s end, buyers with lower ideas were discovering they were not being immediately refused from sellers and we heard of several reports of sellers attempting to work with buyers in order to conclude business.
At the end, popular opinion of the trade is that it is questionable if packers liquidated a week’s worth of slaughter last week and looking back over the course of the last couple of months, there has been only a single week were packers barely outsold the slaughter. In re-gards to trading levels heard, packers supposedly sold HTS at level of $105-$105 delivered with unconfirmed rumours traders accepted a dollar less. Meanwhile, we also heard of sales by packers at $104-$105 on BS and $106-$107 delivered on BBS and $107-$108 delivered on sales of HNS.
Members of the cow hide trade also report a mixed bag of trading. Sellers started the week with aspirations to hold prices steady, while it appears someone forgot to tell buyers. Midway through the week, we heard of a handful of sellers making calls trying to generate some bids, as it appeared buyers were not ready to pay more money and in fact only confirmed suspicions that producers may not possess the sold forward positions they had been advertising.
In the meantime, sellers are trying to convey they sold HNDC as high as $90 delivered; however, we know of some producers who sold last week at levels of $85-$86 delivered and happy to get it. Meanwhile, there are claims that some producers passed interest on HNC last week at levels as high as $74 FOB; however, this bid was for limited volumes, as we heard rumblings that those buyers with volume were able to pay levels close to this price. Overall, popular opinion of the trade is that it is unlikely producers sold a week’s worth of product, while prices were roughly steady across the board.
THE LOOK AHEAD
As to what we expect for this week, we look for a week of both sides jockeying for position. Buyers are leaning towards opinions that suppliers will not be able to maintain their last traded levels and we look for them to be optimistic entering the week, especially with it appearing as if there were more than a few sellers second-guessing their efforts to obtain more money at the end of last week.
In the meantime, sellers continue touting strong sold forward positions and it will certainly be interesting to see how many are willing to continue with their stiff posture again this week. However, we must admit, we are certainly intrigued by the number of people who have just returned from Asia in the past week, while there are some high profile names travelling this week.
At the end of the day, prices are still $2-$3 higher than levels a couple of weeks before the Asia Pacific Leather Fair at the end of March, and considering that slaughter levels do not appear as if they will be easing anytime soon as packers continue to register decent profits, we would continue selling into the market.
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