US Perspective—27.10.15
27/10/2015
www.themaxfieldreport.com
Members of the big packer trade report that interest slowed considerably as last week came to a close. Numerous sources reported only a few miscellaneous issues to attend to and it appears that the lion’s share of the business concluded took place in the middle of the week.
Popular opinion in the trade is that there were more hides changing hands last week compared to the last several weeks, while there are even a few pundits of the opinion that sellers may have sold all their production. With regard to prices, they drifted lower again, without question, by $2-$3 depending on the selection and origin.
Sources report prices such as HTS at $65 delivered, and there were unconfirmed rumours of even lower levels. BRS were running at $63-$64 delivered and ideas on CBS were $61-$62 delivered. Elsewhere, sources report buyers being able to buy heavier-weight hides at good prices because these hides are more abundant than normal for this time of year. This is coupled with reports that cattle are coming to slaughter 30 pounds higher than a year ago. The fact winter is just around the corner has many buyers bidding prices aggressively lower.
Looking ahead, sellers may feel a bit better about things this week, especially if assumptions that they sold a decent number of hides this week are true. If correct, we would assume this would allow sellers to mend their ailing sold-forward positions. As for buyers, one could make a logical argument that many view current trading levels as a buying opportunity. A number of buyers have taken advantage of lower prices to lower their raw stock costs and considering that leather orders are not equal to levels of a year ago, one could argue that buyers may have adequate inventories for the next couple of months, which would take them up to the end of the year.
Elsewhere, we are hearing from a number of sellers that they are starting to experience problems again with tanners requesting delays in shipment, filing claims or looking to renegotiate some of their higher-priced, older, outstanding contracts. In the meantime, we have even heard the “C” word (“cancellation”) uttered by a couple of sellers. Although as of this writing, these “problems” pale in comparison to those seen by sellers this summer, it always raises red flags for those selling hides.
We tend to suspect that those selling hides would welcome some follow-up business. If this should come to fruition, we could certainly go along with arguments that perhaps we have found the bottom end of the trading range. Especially considering that current trading levels are hovering around their lows for the year. It should make things very interesting to see how things play out this week.
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