US Perspective—24.05.16
24/05/2016
www.themaxfieldreport.com
Last week saw offers from big packers unchanged compared to the week prior, while packers appeared buoyed with confidence. Throughout the week, packers were laying claims of being able to sell hides last week at steady or incrementally higher levels, although there were several members of the trade questioning exactly how many hides were changing hands at the higher levels, leading many pundits to suspect it was unlikely that packers were able to liquidate a week’s worth of production.
There were also concerns expressed by some members of the trade that packers continue to sell direct to tanners at levels $2-$3 lower than where they are quoting prices to traders. This may be a case of frustrated traders attempting to “stir the pot”.
As to trading levels last week, packers were laying claims of selling HTS for as much as $68, while other members of the trade were pegging them closer to $66-$67. Trading on BRS reflected levels of $63-$64, while trading levels on BBS checked in at $70-$72 and HNS traded close to $73-$74. Elsewhere, prices of heifers appeared to firm up, as trading on HNH reflect levels as high as $57-$58, while HBH changed hands late in the week at $55.
In the cowhide trade last week it appears that sellers continued to struggle; it is clear there are more people looking to sell cowhides than buyers looking to buy. We have reports that a couple of the larger processors were in Asia last week, with speculation by some pundits that they were not only looking to conclude some substantial orders, but to collect late payments as well.
Prices were down $1-$1.50 per hide, depending on the selection, as well as producer. Overall, HNDC appear to be facing a substantial amount of pressure as we are hearing that a number of producers were pushing hard for sales last week. HBC continue to face pressure, but on a positive note, we did hear that a few producers did not have offers by the end of the week.
It appears that HNDC slipped below the fifty-dollar mark last week with sales at $49-$49.50, while trading on HNC ranged between $36-$38. Trading levels on HBC were also lower, with sales in the north slipping under $30, with trading at $29, while material in the south sold at $27.
The big packer market ended on a steady note last week, but there are a number of pundits starting to question how long packers can continue to trade at such levels. This is being fuelled by the fact that sales continue to fall short of the slaughter, as illustrated on a regular basis by the USDA Export Sales Report. In addition, many pundits point to the large round of business to China in the last week to ten days. Some claim that this round of business covered many tanners’ needs for the summer, and many tanners will remain fairly inactive over the next couple of months.
We do not look for much of a change for those attempting to sell cowhides as it simply appears there are too many producers around the globe with unsold inventories. The good news for producers in the US is that slaughter levels are following their seasonal trend and moving lower.
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