US Perspective—30.06.15
30/06/2015
www.themaxfieldreport.com
Big packer hides came under pressure again last week. Sources reported that a number of sellers appeared very focused on identifying customers who had cash (ability and wiliness to open letters of credit) as well as being able to take immediate delivery of the product. In turn, these sellers recognised that they held the upper hand and this led to reports of sales at levels ranging from $3-$5 under the last established trading levels, while there was a number of unconfirmed rumours of sales of some selections at levels even lower than this.
Overall, opinions of the trade appear mixed as to whether or not packers were able to liquidate a week’s worth of production. The reason for the confusion is that it is difficult to decipher which sales last week were new business and which sales were resales.
We continue to hear producers of wet-blue hides pushing hard for sales. Several sources claim some producers appear especially aggressive, indicating that they are willing to consider “reasonable” ideas from buyers. Some sellers sold HTS as high as $80 delivered, while there are accusations insisting some traders were offering late last week as low as $72 delivered. Meanwhile, sales on BS last week ranged from a high of $78-$79 delivered, to as low as $75 delivered according to rumours. We also heard of sales on BBS as high as $87-$88 delivered, while there were claims they sold as low as $85 delivered.
The selections suffering the largest decline last week were Jumbo and Super-Jumbo steer hides. Part of the decline was that our price guide was lagging the market, due to a general lack of reporting, as sellers were reluctant to broadcast most recent trading levels. According to sources, sales of Jumbo HTS took place last week at levels close to $87 delivered, while sales of Jumbo BS were a dollar higher. Sales of Super-Jumbo HTS were close to $92 delivered and there were rumours of sales lower than this, while BS sold at $93 delivered and rumours of sales at lower levels.
Reports from members of the cowhide trade were similar to those in the big packer trade. Lack of activity among some tanners is forcing many to have to sell the same hide a second time. Customers who can pay and take immediate delivery are well aware of their value and are bidding lower accordingly.
Due to large amounts of rain in the south-west of the US this spring and early summer, there is more than ample grass, leading to thoughts we could see the number of cows in the slaughter mix decrease further moving forward.
In regards to trading levels we heard last week, HNDC appear to be able to sell around the $69-$70 delivered range, while there are rumors of some sellers accepting something closer to $65 delivered. Meanwhile, it appears sales on HNC struggling to hang on to levels of $60 delivered and some would argue prices no longer have a “6” as the first number. In the meantime, interest on HBC is lacklustre with sales recorded at $56-$57 delivered for product in the north with rumours of sales at even lower levels.
As to what we expect for this week, the good news for those selling hides is there is a holiday at the end of the week (for July 4) and this should result in a slaughter under 500,000 head. Sellers recognise they will likely have to readjust their ideas and look for asking prices to start somewhere close to our last reported trading levels.
That said, we are encouraged by reports of several “fresh faces” in the marketplace last week. Obviously, considering the substantial reduction we have seen in prices, the conclusion of the trade is that current trading levels allow tanners to make a profit. Worth noting, we are hearing rumblings of some leather buyers looking for price concessions on new orders and there are reports that some tanners have already conceded to prices that are $0.10 per square-foot lower than levels booked early this spring.
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