US Perspective—11.03.14
11/03/2014
www.themaxfieldreport.com
The efforts of packers last week allowed the market to move incrementally forward, attributed to a slightly smaller offering list, smaller slaughter levels and strong sold-forward positions. It is also worth noting comments from several members of the trade that traders appeared a bit more active last week, perhaps pushing to liquidate their long positions. Overall, popular opinion of the trade is that as far as the number of hides exchanging hands last week, sales were not robust, compared to the past couple of weeks, leading to thoughts that it is likely that this week’s USDA Export Sales Report will fall short of the last couple of reports.
As far as trading levels are concerned HTS sold in a range of $112-$114 delivered depending on weight average and port, while BS sold at level of $111-$112 delivered. Meanwhile, sources share that strong interest continues for BBS and HNS and we even heard of unsolicited bids on CBS last week as high as $112.50 delivered. Trading levels on BBS reflected $117-$118, while a limited number of HNS sold as high as $118-$119 delivered. In the meantime, heavier-weight steer hides and steers from Canada continue to find favour with tanners due to their split return, while producers of wet blue are struggling to find buyers for lighter-weight hides. Members of the cowhide trade have mixed reports as to interest and activity last week. Some sources insist that they had a sluggish week of trading, while a few isolated sources report enjoying a decent round of interest. Overall, trading levels appear unchanged with last week, although there were rumblings towards the end of the week of better interest on HBC and this allowed producers to improve upon their last traded levels. The number of cows in the slaughter mix continues at muted levels. Last week’s slaughter was down 19,000 head, or close to 15%, versus levels of a year ago and pundits are of the opinion that we are not likely to see an improvement any time in the future.
As to what we expect for this week, we really do not see much change happening this week. As we move through the week, we will start to see a few members of the trade depart for Asia in order to meet with their customers prior to the APLF exhibition in Hong Kong at the end of the month. Meanwhile, Tuesday, March 11 marks the start of Lineapelle in Bologna and with sellers in most parts of the world possessing strong sold-forward positions, there really is no reason to think we will see lower prices. We look for limited offers this week as the vast majority of producers with people travelling in the next couple of weeks will want to reserve some product to market while they travel. Meanwhile, we continue to monitor letters-of-credit openings, as we believe that as tanners continue to take delivery of hides that continue to rise in price, it is likely to result in credit lines for many tanners being squeezed and it will be interesting to see how sellers navigate these problems.
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