The US perspective - 22.10.13
22/10/2013
www.themaxfieldreport.com
Prices of big packer hides moved higher again last week even though many of tanners’ favourite selections were not offered. Unlike the week before where packers were willing to pursue unsolicited interest, packers were reluctant to counter this interest last week and popular opinion of the trade is that there were far more hides bid last week than what was booked.
In the meantime, packers appeared as if their focus is shifting to marketing jumbo and super-jumbo hides selections as we are told that hide weights have increased significantly the last several weeks and this, coupled with the fact most packers are oversold on regular-weight steers’ hides, is not affording packers to offer many if any regular-weight steer selections.
Meanwhile, we are hearing reports that some packers passed bids on HTS as high as $96 FOB last week, while we heard opinions from some pundits who claimed buyers desperate for coverage might bid as much as $98-$99 FOB this week. Also worth noting are unconfirmed rumours that packers sold BBS last week as high as $99 FOB and HNS at prices slightly better than $100 FOB, and it is likely that our price guide is lagging the market as there simply are not many of these selections trading hands.
Members of the cowhide trade also report decent demand again last week with sources sharing that like big packer hides, producers also saw a fair amount of unsolicited interest. Overall, it appears there is more than adequate interest on HNDC, while sources report there is also a fair number of buyers seeking HNC as well. We have heard there was improved interest on HBC the last 10 days to two weeks as well and all of this is allowing producers to push prices higher.
As far as trading levels, we hear that producers are holding to ideas of $90 and higher if they offer HNDC, while those with offers of HNC are looking for $85 delivered and higher last week as sellers do not appear to be bashful in their ideas.
In the meantime, also contributing to the lack of offers is the fact that sellers are well sold, while the number of cows in the slaughter mix is falling well short of seasonal levels for this time of year, as this is usually the time where the percentage of cows in the slaughter mix tends to rise.
THE LOOK AHEAD
As to what we expect this week, we have a difficult time believing that we will see any increase in the number of hides offered. Sellers collectively enjoy one of their strongest sold-forward positions in the last few months. We suspect those who offer will only be looking to extend their sold-forward position on the few selections that are not sold as far forward as regular-weight steers.
In the meantime, as demand is exceeding supply, it is pushing prices higher and higher. There is a growing sentiment of the trade leaning towards opinions that we are likely to revisit some of the record high prices we saw earlier this year, especially with slaughter levels declining due to limited supplies of live cattle and the leather business appearing as if it is exceeding expectations.
As prices continue to rise and approach record levels, this raises a red flag for many members of the trade, including your editor, as it raises the cost of doing business. This is likely to test the credit limit of many members of the trade and unfortunately, it is likely that those who are not well-financed or are inefficient operators could be facing some real problems in the coming months.
Meanwhile, buyers who are in need of hides are unlikely to find many hides for shipment in the next few weeks, and those buyers who have aspirations of finding any bargains are likely to be disappointed as we do not believe sellers will be in any mood to negotiate prices.
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