US Perspective—01.03.16
01/03/2016
www.themaxfieldreport.com
Prices were steady to incrementally higher last week, as it appears packers were able to parlay interest on more popular selections into higher prices. Those with aspirations of buying at prices lower than the last reported trading levels found packers unwilling to concede to their ideas.
We are aware of buyers who were willing to improve their price ideas in order to buy hides, while others appeared content to wait again until this week. In the meantime, we are also hearing of a considerable amount of interest from traders last week; many pundits are of the opinion that many were covering their outstanding positions as opposed to booking business back-to-back.
Offers of Jumbo and Super-Jumbo steer hides were not nearly as prevalent last week, as a general warm-up in the weather across much of the US is leading to reports that cattle are cleaning up nicely over the course of the past two or three weeks. Collectively, packers sold a decent number of hides and may have come close to liquidating their slaughter last week, which would be the first time all year this happened.
As it pertains to trading levels, sales of HNS reflected $71-$72 (FOB), while sales of BBS ranged from $69-$70 (FOB). Sales of HTS were at levels ranging from $63 to $65 (FOB), with sales towards to higher end of the range in limited volumes and believed to be traders covering shorts. In addition, we had sales on BRS at $62 (FOB), while CBS sold at $55 (FOB).
As to our initial thoughts for this week, we tend to believe that sellers enter the week buoyed with confidence, especially on the heels of what appears to be a moderately successful week of trading last week. In the meantime, although harvest levels are slowly inching their way higher, the increases thus far have been negligible and sellers are likely to have little patience, if any, for buyers with price ideas under the last reported trading levels of sellers.
Leather business for the majority of side leather tanners continues to fall short of levels of a year ago. Although many automotive tanners continue to appear busy, automotive leather demand is, unfortunately, only half of the demand we see for bags and shoes.
Elsewhere, reports coming out of last week’s Lineapelle show are mixed, (depending on whether you are a buyer or a seller). Those looking to sell hides are not laying claims to concluding voluminous business, but according to many producers in attendance, they were successful in concluding some key pieces of business at no worse than steady levels.
We also heard reports that many Italian tanners appeared rather passive during the show and there was speculation from several pundits that they are closely monitoring Chinese tanners before making any major commitments for purchasing hides.
That said, the market starts the week on firm ground; however, in our humble opinion we question how much fuel remains in the tanks of producers in order to continue to push prices higher. In the meantime, the APLF exhibition is only four weeks away, and with several members of the trade scheduled to travel to Asia in a couple of weeks, we could see a situation where many buyers rein in their ideas until they have an opportunity to meet with those travelling face-to-face.
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