US Perspective - 30.09.14
30/09/2014
www.themaxfieldreport.com
Big packer hides appeared to “run out of steam” in the second half of last week. The week started out with packers once again only having a limited number of offers, while laying claims to strong sold-forward positions. However, by the middle of the week, sellers appeared somewhat surprised by the resistance they were experiencing, while there were claims that some of the traders were much more aggressive for bids.
As we moved towards the end of last week, we are aware of a number of sellers who were much more willing to negotiate prices.
Overall, popular opinion of the trade is that it is unlikely packers were able to liquidate their slaughter last week, leaving many members of the trade feeling that this Thursday’s USDA Export Report will probably confirm that packers, for the tenth time during the third quarter, failed to sell the slaughter.
Meanwhile, in terms of prices heard, sources claim that HNS traded somewhere around the $122-$123 delivered range ($115-$116 FOB), while we understand best ideas on BBS were close to $121 delivered ($114 FOB). In addition, sources share that ideas on HTS were anywhere from $116-$118 delivered ($109-$111 FOB), although there are some who insist, they had bids higher than this.
As to cowhides, the majority of sources we spoke with reported a lacklustre week of interest, leading to a quiet week of trading. Producers started the week with offers that appeared in line with the week prior; however, sellers quickly found that buyers in general had no interest in paying even steady money, as the lion’s share of the bids last week were reported to be at least a couple of dollars under the last reported trading levels.
Overall, sellers insist that they were able to fend off the lower ideas of buyers. However, we are hearing plenty of rumblings insisting that there were unreported sales towards the end of last week at levels under the prices reported on our price guide. Worth noting, is that much of the interest seen last week was for HNDC, while producers of HNC and HBC continue to report only minimal interest.
As to what we look for this week, we would not be surprised if producers did not have a few more hides to offer. However, we tend to suspect sellers will start their asking prices at steady levels, even though many sold hides last week at levels under their official asking prices. Meanwhile, we are approaching the Golden Week Holiday for Chinese tanners, while we will see members of USHSLA gather in Chicago later this week (if problems with air travel following a fire at an air traffic centre there are resolved), and this should result in a quiet week of trading.
In the meantime, we have been hearing for some time nothing other than strong demand for automotive leather, but leather demand for the other segments of the market is not equal to levels of a year ago and sales for the third quarter certainly support such claims. That said, in our opinion the upside potential to the market appears limited at bet, as the market appears to have lost its momentum. We believe the record low slaughter numbers should assist producers in limiting the amount of the pending correction, as long as sellers are willing to sell into the market.
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