US perspective – 8.10.13
08/10/2013
www.themaxfieldreport.com
Overall, the US market for both big packer hides as well as cowhides was a little busier than most had anticipated last week. The week began with opinions of pundits that strong forward sales positions by producers resulting in only a handful of offers, coupled with holidays in Asia and the annual United States Hide, Skin and Leather Association [USHSLA] convention in Chicago would lead to a lacklustre week of trading. The consensus was that both sides would likely use last week to evaluate the market, especially with HTS prices reaching levels close to $100 delivered again.
Surprisingly, a number of sources are reporting many more inquiries/ interest than they anticipated. A number of sources have commented upon returning from Chicago claiming they had more interest than expected from both Korean and Chinese tanners, which only further confirmed in their opinion there is still a decent amount of underlying demand for hides.
In addition, buyers looking for bargains found sellers with no patience for lower ideas, encountering nothing but full-priced counters from sellers. This led to the consensus of the trade that the hides that were sold last week traded at no worse than steady levels with the week prior, while the majority of sales reflect trading levels $1-$2 higher than their last level, depending on the selection.
Trading levels herd were calling HNS as high as $103 delivered, while BBS sold as high as $102 delivered. HTS reached $99 delivered with unconfirmed rumours $100 delivered was paid, while BS sold at $99 delivered. Interest on HNH was reported at $88 delivered and HBH at $86. Interest on cows was decent as well as sales on HNDC reflected $89 delivered, HNC at $81 delivered and HBH at $68 delivered for northern material.
Also worth noting are comments from producers of wet-blue hides that they continue to see decent inquiries / interest and over the course of the past several weeks, it is speculated that many producers have been able to liquidate some of their accrued production of wet-blue.
THE LOOK AHEAD
As to what we look for this week, Asian tanners will return to their offices tomorrow from their week-long absence and we suspect tanners with aspirations of seeing lengthy offer lists from sellers will be severely disappointed.
Overall, sellers collectively as a group enjoy a much stronger sold-forward position the few weeks prior to the Shanghai Fair. This, coupled with speculation we will see packers slaughter fewer cattle as we move forward due to declining margins in the packinghouse and some of the lowest inventories of live cattle we have seen in sixty years, will keep offers limited in our opinion.
Meanwhile, with sellers buoyed with confidence and popular opinion of sellers that there is still underlying demand not covered by Asian tanners, if prices are to change this week it certainly appears from our vantage point that there is more upside potential to the market than prices moving lower in the near-term.
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