US Perspective—20.09.16
20/09/2016
www.themaxfieldreport.com
Members of the big packer trade claim interest demand at the start of last week was sluggish, then progressing to a point of nearly non-existent as the vast majority of tanners were out of the offices celebrating holidays.
Most had asking prices that were a couple of dollars higher than the last reported trading levels, which most members interpreted as a tactic to keep price steady. Buyers who expressed interest in buying had their own set of ideas, as many were targeting prices $2-$3 lower than the last reported trading levels and with neither side willing to concede to the other, it was a quiet week of trading.
Most selections traded within 50 cents of their last established trading levels, with the exception of heifer selections, which appear as if they succumbed to lower prices, with most sales $1-$2 lower than the last reported trading levels. There was continued decent interest in HNS and BBS, while it appears producers of wet blue hides are still attempting to liquidate a sizeable overhang of unsold product.
Elsewhere, members of the cowhide trade also report an uneventful week of trading last week due to the holidays in Asia. Sources report producers started the week with asking prices $1-$2 higher than the last reported trading levels as it appears most producers have enjoyed some decent sales over the course of the past few weeks and most laying claims to stronger sold-forward positions. In the meantime, most buyers interested in buying were looking to pay no more than steady levels and with buyers and sellers not on the same page in terms of prices and the holidays last week, popular opinion is that only a minimal number of hides were sold.
Producers were able to eke out some incremental increases with the largest increases seen on HNDC. Sales of HNC and HBC also reflected higher prices, leading most pundits to the opinion that prices last week were $1-$2 higher on a limited amount of sales.
As to what we expect this week, we tend to lean with other members of the trade that prices of big packer hides appear a bit toppy. This coupled with slaughter levels hovering around the 600,000 head levels for the past several weeks and sales appearing as if they have been falling short of the slaughter, we suspect there are a few packers who may have a few selections that they would like to sell this week. That said, we have not seen the “usual” push by tanners who have a history of building their supplies of raw stocks as they recognise that the current production of hides offer some of the best-quality hides of the year. This coupled with trading levels that are running roughly 8%-10% lower than levels of a year ago has many pundits of the opinion that there are definitely buying opportunities for opportunistic buyers.
We remain of the opinion that we are likely to see a decent round of business take place some time in the immediate future, as we believe that there is a decent opening to buy for tanners, while packers have more hides for sale than they are willing to admit. This is why we believe the upside in the market for now appears limited, while we tend to believe there is not much downside to prices as well, especially keeping in mind they are already lower than a year ago.
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