US perspective - 17.1.14
21/01/2014
We will close Monday January 20 due to the Martin Luther King Holiday and will not publish a daily US Hide Report.
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The consensus of reports from various members of the big packer trade is that interest started the week pleasantly surprising; however, it fizzled towards the end of the trading week. We heard reports from several members of the trade who shared the week started surprisingly with a fair amount of interest from a number of perspective buyers; however, it appears the lion’s share of buyers were struggling to come to grips with the asking prices of packers.
As the week progressed, buyers who were desperate for hides appear as if they had resigned themselves to the fact they would have to pay more for hides this week. Meanwhile, the majority of buyers who had ample inventories did not appear as motivated to pay more money. This was leading to thoughts that it is likely that there was more business not concluded versus booked and unlikely that packers cleared their slaughter this week. Overall, popular opinion of the trade is that prices are up another $2-$3 this week versus levels of a week ago and over the course of the last couple of weeks, prices are up roughly 5%.
Reports from overseas claim there was no lack of effort from buyers who were trying to bid prices at steady levels this week; however, these buyers quickly found out that sellers had little patience for ideas so below their asking prices. What we find very interesting are reports from members of the trade who shared that some of their buyers who had been bidding aggressively under the market last week and unable to buy hides, apparently decided this week that they needed hides and improved their ideas by several dollars in order to buy hides.
We were able to round up a modest number of sales today led by reports of BBS exchanging hands at $106, while sales of J-BBS check in at levels of $114. Other trading is calling BS trading in a range of $99-$102 depending on weight average, while we also have a sale on HNDC at $88. In the meantime, the only other sales are a report on HNS at $108 and J-HNS at $116, while we also have a sale on J-HTS reflecting levels of $113.
Reports from members of the cowhide trade are very similar to those in the big packer trade. Sources report the week started out with producers offering a limited number of hides at levels $2-$3 higher than the week prior trading levels, depending on the selection. Sources share that interest started the week surprisingly better than most anticipated, as there were a fair number of buyers interested in buying. However, once buyers recognised that sellers were not willing to concede their ideas on higher prices, many of these bids went by the wayside.
Overall, popular opinion of the trade is that although there were not as many hides that exchanged hands as last week and likely that producers did not clear their slaughter this week, the trade appears in agreement that prices were roughly a couple of dollars higher on the hides sold this week.
As far as trading is concerned, we were able to round-up a few isolated reports of trading as we had sales of processor BS reflecting levels of $99, while sales of HNDC were sold as high as $90 with unconfirmed rumours some sellers obtained as much as $91. Meanwhile, the only other sale was a trade on HNC checking in at $82.
Our weekly TMR Cowhide Index comes in two dollars higher than last week checking in at $78.00. Worth noting, today’s index is also an all-time record, eclipsing levels we saw back last November when the index stood at $77.75. Compared to a year ago, our index is $11.50 or 17.29% higher, while for the calendar year, our index is up $3.25 or 4.35%.
THE LOOK AHEAD
What is interesting is that over the course of the first two weeks of 2014, we have seen prices improve by $5-$6, or approximately 5%. Many members of the trade will be quick to lay claims that this is a result of a significant drop in the nation’s slaughter as it is no secret that slaughter levels are running more than 10% below levels of a year ago.
However, something we find intriguing is that slaughter levels over the first couple weeks of 2014 are not that much different than they were dating back to 2004 following the announcement in late December of 2003 that the US had experienced its first confirmed case of BSE. Slaughter levels in 2004 dropped on the average by 55,000 head per week versus 2003.
What is even more interesting is that prices of HTS following a brief spike in pricing of close to $6 / hide in January, started to drift lower throughout the first half of 2004. They reached a bottom in May that was $10 lower than January’s average, only to rebound to their highs for the year in July at $63, and then finish the year at $61.
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