US Perspective—06.12.16
06/12/2016
www.themaxfieldreport.com
Packers started the week with offer lists for the most part that were unchanged with the week prior, conveying a message to buyers that the market remained firm, while also insisting that they remained well sold. However, by the middle of the week, we started to see more cracks develop in the armour of packers, which led to numerous rumours of many packers being willing to listen to the ideas of buyers. We are of the opinion there was business concluded quietly at levels below the last reported trading levels.
The sentiment of the trade is that it is unlikely that packers sold a week’s worth of production and that trading levels ranged anywhere from $1-$3 lower, depending on the packer and the selections. In the meantime we have a couple of sales reported that were concluded over the weekend, as we have regular weight packer HTS checking in at $70 and processors at $67, while the only other sale is a BBS at $74.
The cowhide market also saw producers start the week with aspirations of holding prices steady as offer lists, for the most part, were in line with the week prior. Overall, sources report interest last week as mixed, as it appears there was more than adequate interest for HNDC, which continue to appear as if they are in strong hands, while demand for HBC or HNC appeared a bit sporadic, especially HBC, due to reports that other origins around the globe appear as if they are pressing for sales.
As to trading levels last week, prices of HNDC appear fully steady, while prices on the surface for HNC and HBC were steady; there are plenty of rumblings of some producers quietly taking prices roughly $1 and possibly $2 lower, depending on the producer and the selection.
The market ended on a softer note the second half of last week and this is fuelling further speculation that we will see prices remain under pressure this week. Especially if thoughts that producers did not liquidate their slaughter last week are correct. In the meantime, producers collectively are looking for some ‘end of the year’ business from tanners; however, we will have to see if buyers have any interest in following the market, as the strong US dollar is certainly weighing on buying decisions.
Keep in mind that there are a number of people travelling Asia this week. We suspect there will be plenty of eyes on those travelling and it will certainly be interesting to see if any of them have special offers for the tanners they are visiting. There is widespread speculation that producers do not possess as strong a sold-forward position as they did a month ago and this, coupled with slaughter levels that continue to exceed 600,000 head on a regular basis, is fuelling speculation for lower prices.
The challenge as we see it for producers leading up to the Christmas holiday is to find buyers willing to accept shipment when Asian tanners are out of their offices celebrating Chinese New Year (January 27). Unfortunately, for selling hides, this task will not be as easy this year, especially keeping in mind that tanners in Italy are unlikely buyers due to their on-going wastewater problems.
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