US Perspective—24.03.15
24/03/2015
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Last week saw a stalemate develop in the big packer market. Packers started the week with limited offers that for the most part resembled their offer lists from the week prior. Early in the week, we heard that there were a fair number of buyers expressing interest in buying; however, unfortunately for packers, the majority of buyers were looking to buy at levels $1-$2 under the last reported trading levels.
As the week progressed, sellers were not successful in persuading buyers to improve their ideas. In the meantime, there were a number of people speculating that some sellers were considering succumbing to lower ideas, as the week ended, we were not able to confirm and reports of sellers accepting prices under their last reported trading level. Meanwhile, many other buyers appeared uninterested in offers last week, claiming that they were more interested in greeting the numerous people who were traveling last week and this week.
With regard to prices paid last week, reports claim BBS sold at levels close to $111-$112 delivered, while HTS traded in a range from $103-$105 depending on origin, while BS were sold at $100-$103 delivered, also depending on origin. Meanwhile, HNS traded at levels of $112-$113 delivered, while sales of heavyweight HTS and BS were reported at levels of $113-$118 delivered, depending on weight average and origin.
We expect there to be a limited number of public offers as the lion’s share of the US trade is already in Asia visiting customers. In the meantime, we find it extremely interesting that some of the hides on offer are available to ship in April, which confirms to us that many producers are not sold quite as far forward as they had been claiming.
Pundits insist the overall fundamentals of the market have not changed and continue to question the firm tone of the market. These members of the trade insist that in spite of record low harvest levels, sellers’ “supply argument” seems to be waning on buyers. Especially with numerous “rumblings” about “special” offers and hides that can ship earlier than expected. Meanwhile, we are hearing isolated requests from some buyers to delay shipment and question if this is attributed to lacklustre leather orders for some tanners. One other important item in our opinion is drop split prices that are running close to 40% below levels of a year ago. In addition, numerous sources in Asia are reporting large unsold inventories of drop splits at numerous tanneries and we suspect that this will weigh heavily on the market until this situation improves.
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