US perspective – 16.07.13
16/07/2013
www.themaxfieldreport.com
Due to personal travel, we will only offer an abbreviated version of our US hide report.
THE COMMENTARY
• Popular opinion of the trade was that sales activity improved last week compared with the holiday-shortened week prior.
• Packers started the week with intentions of holding prices steady; however, by mid-week appeared to abandon those plans and were countering bids they deemed reasonable.
• Sentiment of the trade is that packers sold a modest number of hides direct last week, while some of the larger traders accused of selling hides short.
• Trading levels heard included HTS as low as $102-$103 delivered, as tanners’ poor opinions of grain quality of this selection is making sales difficult. Sales on HNS at levels of $109-$110, and BBS at $105-$106 as rumblings of re-sales clouded trading levels, especially on BBS.
• Overall consensus of the trade is that prices of big packer hides finished the week a bit softer than they started the week and unclear if packers were successful selling a week’s worth of production.
• Reports from the cowhide trade a bit more optimistic, as it appears fewer numbers of cows / bulls in the slaughter mix, coupled with improved demand by tanners, especially for HNDC, is allowing most producers to defend against attempts to push prices lower.
• Multiple reports of HNDC finding favour from a number of shoe-upper tanners and this is allowing producers to obtain more money for HNDC last week.
• Demand for HNC and HBC called adequate by most, allowing producers to hold prices steady with their last traded levels.
THE LOOK AHEAD
Looking ahead to what we expect this week, we are in the “dog days of summer” where slaughter levels are close to their highs for the year, while temperatures are at their hottest of the year. In the meantime, we are still technically in the midst of the slow season for most tanners and based on the amount of demand we have been seeing the past several weeks, it does not appear as if many tanners are yet optimistic about business in the near term.
Meanwhile, we are hearing many rumours about leather demand for the second half of 2013 falling under levels of a year ago; however, it is much too early to determine if these reports have any credibility or if they are buyers only trying to weigh in and keep pressure on hide prices.
This week, we believe that packers will have to adjust their asking prices lower than where they started last week, as it is clear that many selections were trading opening $2-$3 under where packers priced them on their offer lists last week. In the meantime, producers of cowhides may have regained a little bit of momentum last week and we will have to see if producers can parlay their good fortunes into more money again this week.
At the end of the day, reports that we have been hearing about leather buyers downgrading leather for next season may be coming to fruition, and likely explains why cowhides appear as if they are finding favour. This is leading us to believe that we very well might see the spread between cowhides and big packer hides narrow as we move forward.
Share this story:
