US Perspective—08.03.16
08/03/2016
www.themaxfieldreport.com
Interest last week in the big packer trade was not nearly as robust as the week prior. According to various reports, there were not as many buyers attempting to bid on hides and there was a noticeable decrease in the number of traders bidding. The decrease in interested buyers did not appear to detour packers from seeking even higher trading levels, especially with packers entering the week in possession of strong sold-forward positions, buoyed by harvest levels that are running close to the all-time record low levels experienced last year.
Trading levels for the most part last week were $1-$2 higher than the week prior, while the general speculation of the trade is that the number of hides sold at the higher levels were somewhat limited and packers probably did not sell their harvest. As to trading levels, popular opinion in the trade is that HTS prices were anywhere from $68-$72 delivered depending on origin and weight average, while sales on BBS ranged from $78-$79 delivered. Meanwhile, HNS sold at $80-$81 delivered, while sales of BRS ranged from $65-$67, while sales of CBS were at $65-$66 delivered.
Also worth noting is that cattle coming to slaughter in the last couple of weeks have been much more free of mud and manure, with reliable sources sharing that many animals already exhibited shorter hair. As a result, the number of heavier-weight hides in the mix is substantially decreased and offers have become nearly non-existent, while we are starting to hear rumblings of a few more heifers being offered.
Elsewhere, interest in cowhides last week was different from interest in big packer hides. Sources reported interest for the most part was rather lacklustre; the majority of buyers looking for product appeared to have ideas that were running anywhere from $3-$5 under the asking prices of producers. Meanwhile, producers had offer lists that contained most selections and according to sources, most producers appeared willing to counter bids, with prices $1-$2 lower than the last reported trading levels. There are reports circulating of cowhide producers in Europe and Australia also pressing for business last week. As it pertains to trading levels, sources report a majority of HNDC sold close to $56-$57 (FOB), while HNC sol sat $42-$43 (FOB) and HBC (North) at $33-$34 (FOB).
As to our thoughts this week for the big packer market, we do not look for packers to alter their game plan, especially keeping in mind that slaughter levels are running at unseasonably low levels, while packers continue to insist they possess strong sold-forward positions. In the meantime, we will also see the first members of the trade depart for Asia at the end of this week, in order to visit customers prior to the start of the APLF exhibition (March 30-April 1).
We tend to believe that many tanners this week may express a lack of interest to buy, especially if they do not have any pressing needs. This leads us to suspect that there will not be any bargains to be had this week and that tanners will prefer to see the offers of their many visitors over the next two or three weeks. Tanners continue to struggle with the firm tone of the market, as leather orders are not exhibiting any signs of improving.
In the meantime, we suspect we will see bargain hunters active in the cowhide market and it will be interesting to gauge the mood of producers. There are HBC for sale, while we are also hearing that there might be a few more HNDC for sale than producers are willing to admit. Meanwhile, we are hearing reports that new leather orders appear geared towards more aniline type leathers and if these reports are correct, it would not bode well for cowhides.
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