US Perspective—06.10.15
06/10/2015
www.themaxfieldreport.com
Last week was not a particularly busy week of trading, as it appears Korean holidays at the start of the week and Chinese holidays towards the end of the week took their toll on interest. In addition, members of the US trade were preoccupied in the second half of last week attending the annual USHSLA meeting in Chicago.
There are continued reports that a number of tanners insist their leather orders are not measuring up to levels of a year ago and this has resulted in many decreasing their soaking levels. In the meantime, tanners willing to share ideas last week continued to press for lower prices and appear as if they were successful. We are aware of a number of sellers willing to negotiate prices, and trading levels were down anywhere from $1-$3 depending on the selections, with Jumbo and Super-Jumbo steers appearing as if they experienced the most severe declines.
As for trading levels, we heard HNS sold as low as $73, while BBS sold in a range of $70-$71. Meanwhile, CBS sold from $60-$63, while sales on HTS ranged from $67-$68, while BS sold at $63-$67 depending on brand content, weight average and origin. We saw trading on HNH range from $59-$63, while HBH sold at $55-$58.
Members of the cowhide trade have similar tales. Several sources shared that they did not see much interest last week due to the holidays in Asia, coupled with the meetings in Chicago. Meanwhile, numerous reports continue to swirl accusing some of the major producers of not possessing as strong a sold-forward position as they have been advertising and this, coupled with the fact that the cow harvest is ramping up and exceeding levels of a year ago, is not welcome news for sellers. In addition, there are continued reports of a number of producers of cowhides in Europe and Australia continuing to press for sales on cowhides, while sources report Brazilian producers of wet blue still seeking volume business.
As to what we expect for this week, from our vantage point, it still appears as if sellers have continued to struggle to liquidate their weekly production the past several weeks, while slaughter levels continue to run at their highest levels of the year. In the meantime, many buyers are formulating opinion that many producers are utilising “smoke and mirrors” as it pertains to their sold-forward positions. This, coupled with reports that demand for hides is falling short of anticipated levels, is forcing many tanners to reduce their soaking levels and is not leaving a favourable impression as to what we can expect for demand for the remainder of the year.
For now, our opinion of the market is that prices are sloppy and it appears there are too many sellers looking for orders. Meanwhile, slaughter rates continue to run at their highest levels of the year, and in our opinion it is starting to appear as if supply and demand are not in balance. If prices are to change, it is likely they will move lower before they move higher.
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