US Perspective—01.11.16
01/11/2016
www.themaxfieldreport.com
Reports from the big packer trade claim that there was moderate interest at the start of last week; however, when news reached buyers that packers had once again raised their asking prices it appears to have sent a fair number of buyers to the sidelines. Several sources are calling business concluded last week not nearly as brisk as the past three or four weeks, while sources also share that the hides changing hands last week were at the increased asking prices of packers.
Sales of BBS were sold as high as $84 delivered, while sales of HNS were recorded a dollar higher. Meanwhile, sales of regular-weight packer HTS sold as high as $78 delivered, while sales of regular-weight BRS reflected levels of $73. In the meantime, the number of heifers in the slaughter mix continues to exceed levels of a year ago and this appears to be limiting packers’ ability to raise prices, as trading shared with us last week reflects only steady levels.
It continues to appear as if unsold inventories of wet blue continue to hang over the market, supported by numerous reports claiming several producers continue to press prospective buyers for bids. Sources share that buyers of wet blue with cash and ability to take prompt shipment appear able to negotiate prices, leading to unconfirmed reports of buyers able to purchase wet blue hides at less than a $10 premium compared to wet-salted hides.
Elsewhere, in the cowhide trade, sources report a decent week of interest and demand from buyers, with sources sharing that interest last week appeared very broad-based. This allowed some producers to improve upon their last recorded trading levels, especially on HNDC and HBC. Sources also report continued decent interest on specialty cow selections, with several reports of producers easily able to liquidate their production of these items at higher prices.
As to our initial thoughts for this week, although we saw the largest slaughter week of the year last week, we sincerely doubt this will have any negative impact on the market. There is a very good likelihood we will see some producers with not as many selections on their offer lists this week, while we also look for producers to limit the number of loads they are willing to sell this week.
We suspect producers will be tempted to raise asking prices on the selections they choose to offer this week: there were simply too many buyers last week who refused to improve their ideas and producers are going to continue to pressure prices higher as we move forward.
We remain of the opinion that the leather business for many side-leather tanners is much better than they are willing to admit. We support our argument based on reports that there are few, if any, tanners tardy in opening letters of credit in the last four or six weeks, while we are also unaware of tanners requesting delays in shipments.
That said, we believe most producers in the US likely sold forward up until Christmas and now the challenge for those selling hides will be to find enough buyers for shipment for the three-week period around Christmas and New Year when tanners in Asia will stop accepting shipments due to the upcoming Chinese New Year (January 28).
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