US Perspective—14.01.14
14/01/2014
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Packers saw decent interest in hides last week. The majority of the sources we spoke to reported no shortage of interest, and, in fact, last week was probably the most interest packers and traders have seen in several weeks. Popular opinion of the trade is there were decent numbers of hides changing hands throughout the week, allowing packers to push prices higher as the week moved along and by the end of the week prices were up by as much as $2-$3 depending on the selection.
HTS started the week selling at $99-$100 and then moved to $101 with decent numbers sold at higher levels, while sales of Jumbos reflect $108 and Super-Jumbos at $110,with plenty of unconfirmed rumours of sales at levels higher than this. Meanwhile, we are aware of sales of HNS last week at $104 and BBS at $103, while there were rumblings of some tanners supposedly paying even more. Prices on BS ranged from $99-$100 depending on the packer.
Overall, many members of the trade were surprised by how many hides packers sold last week, especially considering they started the week with limited offers and talking about strong reductions in slaughter levels that would likely restrict their ability to sell as they moved forward. That said, interest is reported as very broad-based, from numerous countries, with traders participating strongly too. Worth noting, we did have a couple of sales reported pending over the weekend and this has HNS trading up a dollar at $105 and BBS also up a dollar at $104.
Interest on cowhides was also active last week with several sources sharing that they saw better interest than expected from prospective buyers.
Producers attributed the lack of offers at the start of the week to the number of cows in the slaughter mix. For the record, the number last week was down almost 22% on a year ago. Buyers recognising that they needed coverage soon stepped in to try to cover their needs and this assisted producers in being able to raise prices. Overall, much of the interest appeared focused on HNDC, while limited offers of HNC allowed for price increases as well. The only selection buyers did not appear as interested in were HBC and this is why prices on this selection stayed steady.
As to what we expect this week, considering the number of sales last week and the fact that slaughter levels are still expected to fall below the 600,000 level, we would be very surprised if we saw many hides offered this week. Meanwhile, we are aware that there was a fair amount of business last week that was not concluded due to some buyers’ reluctance to follow higher levels and we would expect that these buyers would be back in the market again this week looking for coverage.
The problem is that even if these buyers are willing to pay sellers more than last week, higher prices will not result in more hides being offered. We remain in a supply-driven market and we look for offerings over the next few weeks to be dear, and when given the opportunity to buy, it is likely that interested buyers will not have a lot of say in prices.
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