US Perspective—16.06.15
16/06/2015
www.themaxfieldreport.com
Another lacklustre week of trading. The consensus in the trade was that packers likely failed to liquidate their production last week, in spite of the fact that last week’s slaughter at 542,000 head was one of the lowest non-holiday week slaughters in the month of June on record. Meanwhile, popular opinion is that sellers in general begrudgingly accepted prices several dollars lower than the last reported trading levels in order to sell hides. Traders were much more active compared to packers.
We have heard comments from several members of the trade that the prices reported for various selections are lagging behind actual trading levels. According to sources, traders were booking HTS and BS at levels of $88 delivered and there was speculation that some accepted even lower levels. Meanwhile, we are hearing rumours of BBS sold at levels of $95-$96 delivered, while it is widely speculated that HNS are no longer able to bring levels of $100 delivered or higher.
There are continued reports of tanners being slow in opening letters of credit and this is resulting in some packers reaching out to traders to see if they can take early delivery of their outstanding contracts. Reports from members of the cowhide trade not much different from those in the big packer trade.
As to what we expect for this week’s hide trade, we remain of the opinion there are still a number of producers who fail to acknowledge the possibility that demand has decreased more than the slaughter and that this is why prices continue to decline in the face of a slaughter that is 7% lower than a year ago.
For now, those suppliers attempting to leverage the supply argument are finding this argument carrying little weight, as tanners in general do not appear to be motivated buyers. Meanwhile, tanners who express any interest are reported to be “bombarded” with “special” offers from various producers. With regard to offers this week, popular opinion in the trade is that many sellers are likely to have more than ample offers of various selections this week. The big question this week is if sellers will finally adjust their asking prices to reflect the most recent trading levels, as it is widely recognised that a number of selections sold at levels well below official asking prices last week. We remain of the opinion that we have not yet seen the lows for the year on hide prices.
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