US Perspective—25.06.13
25/06/2013
www.themaxfieldreport.com
The consensus of members in the big packer trade is that last week was a quiet week of trading. Packers started the week with aspirations to try to hold prices steady; however, they met quite a bit of resistance to start the week.
Unfortunately, packers for the most part appeared reluctant to negotiate their asking prices and with the consensus amongst buyers that there was some underlying pressure in the market place, buyers saw no reason to improve their ideas.
As far as trading levels are concerned, packers started the week with hopes of selling HTS at levels of $106 and higher. However, towards the end of the week there were unconfirmed rumours of a few traders taking business as low as $103 delivered. Sources insist that packers were attempting to generate interest at levels of $104-$105.
With regard to this week, it appears that offer lists were a bit more populated and shipping times on new business were same as last week, only lending further support to thoughts that packers did not liquidate their production last week. Worth noting, sources claim there were a few more offers of jumbo and super-jumbo this week by some packers, which is likely to find favour with tanners who need these types of hides. Meanwhile, there are more than ample offers of wet blue and there is wild speculation amongst the trade as to where prices here may finally sort themselves out, especially for those buyers who have cash and can take prompt delivery.
Reports from members of the cowhide trade are similar to those in the big packer trade. Producers started the week with aspirations of holding prices steady with week prior; however, sellers met a firm round of resistance early. By mid-week sellers recognised they were going to have to be willing to negotiate prices. By the end of the week, prices appeared roughly a dollar lower across the board with the exception of HNDC.
In the meantime, there are reports that demand for Chinese domestic furniture upholstery business is exhibiting signs of slumping, further supporting speculation that China’s economy is labouring. It will be important to keep an eye on this situation as no doubt Chinese domestic demand for furniture, shoes and automotive leather is one of the main drivers of the market.
The week ahead is starting with speculation that sellers are likely to have to be willing to negotiate prices. There are more reports coming in of slower than expected letter-of-credit opening and this, coupled with the fact some producers may have been over-advertising their sold forward position, is leading to stories of producers pressing buyers for earlier than contracted shipments.
Sales over the course of the past couple of months have only been mediocre at best and this is lending support to the idea that producers’ sold forward positions are a bit misleading.
We expect the vast majority of producers will likely offer at steady levels and attempt to counter basis reasonable bids received. We tend to believe producers in general are a bit reluctant to lower asking prices in fear it will only encourage buyers to further lower their ideas.
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