US Perspective—17.12.13
17/12/2013
www.themaxfieldreport.com
Last week saw packers start the week with intentions of trying to hold prices steady. However, by the middle of the week, packers begrudgingly resigned themselves to the fact that if they were going to sell hides they would have to be willing to negotiate prices. According to sources, sales last week were anywhere from $1-$3 lower than the last reported trading levels, with it appears Jumbo and Super-Jumbo steers suffering the largest of discounts; declines on regular-weight steer hides were much less.
Overall, opinions are mixed as to exactly how many hides exchanged hands last week. We are aware of a number of members of the trade who shared that they experienced a lacklustre week of trading. In the meantime, there were claims that a couple of the major traders appeared to be liquidating their long positions last week, while we also heard rumblings that one of the packers was touting that they enjoyed a busy week of trading.
Regular weight HTS sold in decent volumes, as low as $99, while we are aware of attempts to buy at $98.50 by the end of the week that were passed after substantial considerations by packers. Meanwhile sales of BS were roughly a dollar back of HTS, while sources share that even HNS and BBS succumbed to pressure last week with sales on HNS ranging from $103- $104 and BBS from $102-$103.
Interesting, we have reports from members of the trade who claimed they were able to move a few isolated loads of hides over the weekend. Sales reported include HNC at $84.50, while we have sales of HNDC reflecting levels of $89. The only other trading was a sale on HNS with sales registered at $104.50.
Reports from members of the cowhide trade claim that producers also started the week with intentions of trying to hold prices steady, only to decide by mid-week that they were fighting a losing battle and should consider lower ideas from buyers.
Overall, it appears that some of the premium cow selections were able to trade at levels close to their last traded levels: however, those with regular “run-of-the-mill” production, were forced to trade roughly a couple of dollars under their last reported levels. In the meantime, even though the number of cows in the slaughter mix is running close to 15% lower than levels of a year ago, members of the trade do not appear confident about producers clearing their slaughter last week.
As to what we expect for this week, this is the last full week of work for the 2013 calendar year. In theory, we would expect sellers to adjust their asking prices this week, as last week’s trading levels are in some cases dollars higher than their last traded levels. In the meantime, we also suspect that offer lists are likely to be as populated as last week, as popular opinion of the trade is that producers have seen their sold-forward positions slowly eroded dating back to early November.
This is the last week for producers to be able to ship to Asia. This, coupled with the upcoming Christmas and New Year holiday, is likely to encourage those looking to buy to bid prices lower.
That is why we view the next two or three weeks as buying opportunities for those needing hides, as we still have some concerns as to the availability of live cattle after the first of the year. Moreover, if slaughter forecasts are correct for January-February of decreases anywhere from 3%-5%, prices could increase at the start of 2014.
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