US Perspective - 05.01.16
05/01/2016
www.themaxfieldreport.com
The past couple of weeks have been two of the quietest weeks in the 2015 calendar year due to the Christmas and New Year holidays. According to various sources, interest from tanners was sporadic and then when you factor in that the majority of tanners that showed interest in buying had ideas that were $2-$3 lower than the last established trading levels, it did not set the stage for a busy week of trading.
There were some minimal pieces of business concluded and for the most part sources are sharing that sales were concluded at steady levels with the week prior. We are aware of rumours that some sellers settled on sales on some of the more difficult-to-sell selections and supposedly sold these at $1 or slightly lower than their last traded levels.
Overall, popular opinion of the trade is that although slaughter levels were muted the past couple of weeks due to the holidays, it is unlikely that sellers sold a week’s worth of production either week. This is leading to thoughts that many packers will enter the New Year with more unsold hides than they were originally planning and, likely, we will see offers this week to both tanners and traders.
Reports from members of the cowhide trade claim that they too had a couple of lacklustre weeks of trading. Overall, the few buyers that expressed interest in buying appeared to have their sights set on buying hides at lower prices, which did not find favour with producers.
According to sources, the few sales concluded over the holidays appear as if they were at their last traded levels and the consensus of the trade is that the cowhide market ended 2015 at steady levels.
As to our thoughts for this week, we are leaning toward the opinion that there is a reasonable chance that we will see an end to packers only offering directly to tanners. We suspect there are a number of packers who have slowly seen their sold-forward positions erode over the course of December.
In the meantime, packers will also be facing a problem of attempting to balance slaughter levels as we move through January as live cattle prices are rising along with box beef prices; packers will be reluctant to lose their margins. That said, placement numbers indicated that we should start seeing more supplies of live cattle in February, which should mean larger slaughter levels than a year ago.
Elsewhere, tanners continue to insist that the leather business is not equal to levels of a year ago, especially for shoe-upper and handbag leathers. This has had a number of tanners insisting that they will be out of the market this month and next and it will be interesting to see if this happens. We know that leather buyers are still insisting that tanners accept lower leather prices for new business and it is possible we will see a correction in hide prices in January as a result.
Share this story:
