US Perspective—26.01.16
26/01/2016
www.themaxfieldreport.com
Last week saw packers start the week with intentions of attempting to hold prices steady with the week prior. However, by the middle of the week, it became apparent many of the packers had a few more hides for sale than they were willing to admit, especially heavier-weight steer hides.
As a result, many of the packers appeared a bit more aggressive for sales in the second half of last week and we are of the opinion there was some direct and voluminous business concluded between packers and tanners at prices lower than those reported on our price guide.
Opinions of the trade are mixed as to whether or not packers were successful in liquidating a week’s worth of slaughter last week. We are leaning toward the opinion that it could be one of the larger sales weeks we have seen in the last couple of months.
It still appears as if there is enough demand for HNS and BBS to allow packers to hold these prices steady for the most part, as we are aware of sales at $70 for BBS and $72 for HNS. Meanwhile, HTS drifted lower with trading on Friday ranging from $61-$62, while BRS sold at $61 with unconfirmed rumours of lower levels, while CBS sold in a range of $52-$53. Meanwhile, as mentioned above, many of the packers are struggling to sell Jumbo & Super-Jumbo steer hides as we heard of sales on Jumbo HTS at $74 delivered and Super Jumbos sold at levels $2-$3 higher than this.
Reports from members of the cowhide trade claim interest was noticeable slower last week. The majority of producers were reported to have started last week with offer lists in line with the week prior, while asking prices for the most part were unchanged as well. However, as the week progressed, sources started to report that many of the producers were much more anxious for bids on HNC and HBC, while sources shared that there appeared to be enough people looking for HNDC to allow producers to sell at levels only slightly lower than their last traded levels.
As to our thoughts on the market this week, we are under the opinion that although hide values on a historical basis appear very affordable, unfortunately for those selling hides, it does not appear as if there is enough demand. As of this writing, we continue to lean towards the opinion that a number of producers have sold-forward positions that are not nearly as strong as they were back in late November or early December and suspect that buyers with money and the ability to be flexible in their shipments will likely have a chance to negotiate prices.
That said, keep in mind that we are moving closer to the Chinese New Year (February 8) and we are aware of a number of tanners will close their facilitates at the end of this week, while the balance of tanners will close at the end of next week. What will be interesting to monitor as we move through the first half of February is if tanners will remain closed longer than usual (as several tanners have announced). This leads us to suspect tanners may be a bit more interested in buying hides before they depart for their holidays. However, we tend to suspect that tanners expressing interest will likely have lower ideas than sellers and it will be interesting to see if producers are willing to add some sales before the holiday in Asia.
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