US Perspective—30.07.13
30/07/2013
www.themaxfieldreport.com
Last week saw packers succumb to lower ideas and with prices down roughly a dollar from the week prior. Meanwhile, it appears pundits do not agree as to how many hides exchanged hands last week. Reports from some members of the trade claim they enjoyed a decent week of sales, while others share that they were not as fortunate. As far as trading levels are concerned, by late in the week it was widely reported some packers had accepted levels as low as $100 delivered ($94 FOB) for HTS, while BS were trading at equivalent levels. Meanwhile, buyers looking to purchase BBS or HNS found sellers with ideas several dollars higher than HTS and by the end of the week it was reported BBS were selling close to $104-$105 delivered ($99 FOB) and HNS were selling at $105-$106 delivered ($99-$100 FOB).
We are in the dog days of summer and this, coupled with European vacations, means we are still in the midst of the slow season for most tanners. This leads us to believe that we will not see any real changes in the fundamentals in the marketplace as we look ahead for the next couple of weeks. Now that steer hide prices are hovering close to the $100 delivered level, we tend to believe packers are going to be reluctant to agree to trade steer hides below this benchmark. If our suspicions prove correct, it is likely to result in a rather lacklustre week of trading, especially with buyers of the opinion that packers likely do not possess the sold-forward positions they have been advertising. This is attributed to slower than expected letters-of-credit openings and larger than expected slaughter levels the past several weeks.
We tend to believe those selling cowhides are likely to remain firm in their ideas this week as producers appear to possess stronger sold-forward positions than their packer counterparts. Keep in mind that the problems with unsold inventories of wet blue hides have not been nearly as prevalent in the past couple of weeks. However, until excess material here has been liquidated, in our opinion those selling wet salted hides will have a difficult time convincing tanners that they will have to pay more money.
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