US Perspective—23.06.15
23/06/2015
www.themaxfieldreport.com
Sellers did not enjoy a decent week of sales last week. Numerous sources reported that those selling hides in general spent the majority of their time addressing problems, while buyers in general and especially from China continue to show little if any substantial interest.
Overall, popular opinion of the trade is that even though slaughter levels are running at historically low levels for this time of year, it is highly unlikely packers cleared their slaughter last week. Unfortunately, for those selling hides, we continue to hear that the vast majority of buyers interested in buying continue to be interested only in limited volumes, while their price ideas are deemed rather aggressive by most.
This situation resulted in a sizeable correction in prices last week, down anywhere from $3-$5, depending on the selection, as the downward pressure in the market did not spare either the big packer market or cowhide market. This resulted in reports and rumours of HTS and BS selling at levels under $80 delivered, while sales on BBS slipped to levels under $90 delivered. Meanwhile, sales of HNS hovered around the $95 delivered area, while trading on heifers is believed to have taken place at levels of under $70 delivered. As to sales on cowhides, it appears there was a little more interest on HNDC versus other cow selections. Trading on HBC has material in the north now under the $60 delivered level.
Elsewhere, even prices of Jumbo and Super Jumbo are feeling the effects of the lower market and by the end of last week, none of the selections on our price guide were listed in triple digits for the first time in more than a year. Meanwhile, we continue to hear producers of wet blue pressing for business and in some instances have heard that some producers are bordering on appearing desperate, especially when attempting to sell lesser quality merchandise.
As to what we expect for this week, we look for those selling hides to have another difficult week of trading. Clearly, buyers are of the opinion there is no need to rush into the market; especially considering how many sellers from various points of the globe are pushing them to consider doing business. In the meantime, the major concern for us is continued reports of lacklustre leather orders, leading to numerous rumblings of tanners who supposedly have more than adequate raw stock in the interim. This, in combination with non-performance by a number of tanners in Asia, is making things very difficult for producers who need to keep product moving as more is produced every day. We look for offer lists to be more populated this week as we suspect sellers will continue to focus on buyers who have money and are able to take immediate delivery of the product.
We are of the opinion that it is very likely that the over the course of the next four or six weeks those selling hides will continue to be tested, while attempting to navigate a difficult overall market situation. The good news for producers is that slaughter levels are unlikely to reflect much of a change, while there are some pundits pointing to the fact that in their opinion there are signs that we could see a decrease in numbers following the Fourth of July holiday.
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