US Perspective - 16.09.14
16/09/2014
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Popular opinion of the big packer trade is that last week was a lacklustre week of trading. The sentiment in the trade is that a combination of limited offers from packers and buyers attempting to digest prices that have passed their all-time record highs resulted in only a minimal number of hides exchanging hands last week.
What is worth noting is that a number of sellers laid claim to seeing a fair amount of unsolicited interest last week and by the time the week was over, there very well could have been more hides bid than were actually sold last week.
As to trading levels, we heard ideas on regular weight HTS as high as $118 delivered, while price ideas on BS were only 50 cents to a dollar back. We heard price ideas on BBS as high as $121 delivered, while ideas on HNS reached $123 delivered.
Elsewhere, we are aware of ideas on HBH at $101 delivered, while Super-Jumbo HTS sold at levels of $120 FOB and higher.
Reports from members of the cowhide trade are also claiming last week was not a busy week for sellers in general; however, there are a couple of isolated members of the trade insisting that they saw decent interest. Overall, sources share there were more than ample offers last week; however, it appeared for the most part that US cowhides priced higher than equivalent selections from other origins is the main reason for the lack of interest.
Sources share that HNDC appeared to have the most interest last week; however, we are hearing reports that sellers are struggling to hold trading levels steady at $90 FOB. Meanwhile, interest on HNC and HBC was spotty at best, with buyers’ ideas running several dollars under the asking prices of sellers, while sellers insist that they were able to move limited volumes at levels steady with last week.
As to what we look for this week in the big packer trade, it is more of the same. We fully expect packers to be guarded with their offers, as most possess strong sold-forward positions and with slaughter levels expected to curtail some time in the next few weeks, most packers are not feeling any real pressure to sell.
In the meantime, tanners continue to complain about high hide prices and low split prices, leading to continued complaints about struggling to operate profitably. Overall, perception in the trade is that leather business in general is decent; however, there is a prevailing opinion that at least Chinese domestic business is slightly lower than last year. Meanwhile, continued push from automotive tanners appears enough for now to keep pushing prices higher.
Our expectation in the cowhide market is not quite as clear, as all-time record spreads between HBC prices and BS appears difficult to fathom. Conventional wisdom is that these prices should converge; however, sellers in general are meeting strong resistance to efforts to obtain more money, especially with equivalent material outside of the US trading at lower levels.
In the meantime, record low cow slaughter is assisting sellers in avoiding lower prices; however, there is speculation that at least a couple of the larger processors may not be as well sold as their competitors and may have to consider discounting some selections in order to re-establish their sold forward positions.
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