US perspective - 24.9.13
24/09/2013
www.themaxfieldreport.com
Last week saw lacklustre interest on big packer hides for both traders and tanners. Pundits point towards the holiday-shortened week of trading in Asia, coupled with higher ideas by packers and only a handful of hides offered as the main reasons for the lack of sales. Meanwhile, tanners who thought it might be a good idea to remain on the sidelines after a couple of decent week of sales, were caught off guard with the US Department of Agriculture reporting yet a third consecutive decent week of sales, with combined sales last week totalling 770,700 hides, the third consecutive week sales have exceeded 700,000 hides.
Trading levels last week were reflecting isolated pockets of interest on HTS at $95-$96 delivered; while we have heard some packers were insisting they had interest as high as $97-$98 delivered which we could not confirm. Meanwhile, BS were sold in light volumes at $95-$96, while we are aware of some packers selling BBS at $99-$100 delivered, while HNS sold at levels of $101-$102 with more than adequate interest on this selection, while sales of Jumbo HTS traded at $107-$110 delivered depending on the weight average.
Members of the cowhide trade report a similar week of activity or should we say lack of interest. The little bit of interest that was seen last week appeared focused in the northern part of China. They were finding European cowhide prices to their disliking (price), so they started enquiring about US cowhides. Meanwhile, lower-than-expected number of cows in the slaughter mix, coupled with strong sold-forward positions by most processors (in fact some may argue an over-sold position), have sellers leaning toward firm prices.
THE LOOK AHEAD
As to what we look for this week, we fully expect sellers to be of a bullish sentiment. Especially on the heels of last Friday’s USDA Cattle on Feed Report which appears to have confirmed what many pundits had been pontificating that available supplies of market-ready cattle will dwindle as we move through the remainder of this calendar year into the 1Q of 2014.
In the meantime, Asian tanners will return to their office this week and it will be interesting to see how many are interested in buying, especially considering we have seen three consecutive weeks of decent sales the past three weeks. Meanwhile, it will also be interesting to monitor the activity of tanners in China who will only have this week for purchases, before being out again next week on holidays.
In the meantime, we look for sellers to repeat what they did last week where they only had a limited number of hides to offer and considering we suspect most did not sell their lists last week, we would expect steady asking prices with last week.
Looking ahead to the 4Q of this year, it is no secret that we will likely see slaughter numbers falling below levels of a year ago. Meanwhile, leather business, although decent, does not appear to be equal to levels of a year ago. There certainly appears as if there is much more demand for hides for corrected grain leather as opposed to new leather orders requiring aniline leather.
Also worth noting is that yesterday was the first day of autumn and long-term weather forecasts are calling for much of the upper part of the US to experience below-normal temperatures starting the second week of October. This means that tanners who prefer summer hides are watching that window of opportunity slowly close and it will be interesting to see if sellers can parlay this into even higher prices.
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