US Perspective—06.05.14
06/05/2014
www.themaxfieldreport.com
In the big packer trade, prices remained under pressure again last week. Unfortunately for packers, the fact that most of Asia and Europe celebrated holidays last week, as well as an increase in the slaughter, did not bode well for those trying to sell hides.
Sources report that interest was thin last week. The few buyers willing to share ideas recognised the softer tone of the market. According to sources, those who attempted to counter the aggressive ideas of buyers, found buyers not interested.
Overall, popular opinion of the trade is calling prices off $1-$2 depending on the selection, while there are rumours insisting that declines on heifers were likely to be even more. Meanwhile, the trade appears in agreement that it is unlikely that packers liquidated a week’s worth of production.
As far as sales prices, HNS were no better than $109, while sales on BBS reflected levels of $108. Other trading included HTS as low as $104, while there are isolated reports of some packers insisting they sold as high as $105.50, while we have a similar tale on BS with sales reported at $104 last week, with claims of sales as high as $105.50. In regards to heifers, we understand HNH were sold at $95, while sales on HBH reflect levels of $93. In the meantime, we did have a couple of sales reported that were pending over the weekend, according to sources, regular-weight HTS were sold at $104, while trading on BS reflects levels at $103.50.
Cowhide prices remained under pressure last week as the ongoing situation in Hebei and Shandong provinces in China continue to wreak havoc in the market. According to sources, there are still a number of hides being repositioned, as well as re-sold and according to some reports, re-sales have taken place at levels close to $10 per hide lower than the all-time record levels that were recorded back in the middle of March.
As to what we expect this week, we tend to think sellers may have a few more hides to offer this week, especially considering the general lack of sales over the past couple of weeks, while slaughter levels have been on the rise, with beef demand improving with warmer weather. Our guess is that offer lists will likely be more populated this week and we would not be surprised if not all of the hide selections were offered.
We are very interest to see where those selling hides start their asking prices this week, especially considering many sellers were trading at levels below the “official” asking prices towards the end of last week. Sellers find themselves in a difficult spot: slaughter levels are on the rise, while sales have been lacklustre over the last couple of weeks. This has likely eroded the sold-forward position of many producers. However, sellers want to avoid discounting hide prices too far, especially considering there are still a number of very high-priced sales still outstanding.
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