US Perspective – 1.7.14
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Members of the big packer trade have mixed opinions as to how many hides were traded last week. The vast majority of sources we spoke with claimed interest was minimal at best, and several reported it was one of their slowest weeks of the calendar year. Meanwhile, there are a few isolated sources laying claims that they enjoyed a decent amount of interest and were able to sell hides at steady to slightly lower prices than the last reported trading levels.
As far as trading levels are concerned, we were aware of sales on HNS at $107, while sales on BBS reflected levels of $106-$107. Meanwhile trading on HTS ranged from $102-$103, while sales on BS ranged from $101-$103. We continue to hear that unsold inventories of heifers hang over the market preventing packers from improving on their last traded levels of $84 for HBH and $86 for HNH.
Overall, prices for the most part were steady to 50 cents lower than the week prior, while opinions vary as to how many hides were sold last week, and we remain of the opinion that sales are likely to fall short of the slaughter.
As to the cowhide trade, offers of HNDC remained limited last week and with a number of buyers looking for material, it appears prices on this selection were unchanged with levels of a week ago. Meanwhile, interest on HBC and HNC was not as brisk and sellers with offers of these selections found buyers not interested in buying at asking prices.
Sources report interest on HBC and HNC was spotty last week with most buyers pressing for levels well below the official asking prices of sellers. We are aware of some limited volumes traded; however, with many buyers with “test bids” $4-$5 under the asking prices of sellers, popular opinion is that even with an unseasonably low number of cows in the slaughter mix, it is unlikely we saw a week’s worth of production sold.
THE LOOK AHEAD
As to our expectations for the week, with the Independence Day holiday at the end of this week, we expect a very short and uneventful week of trading as we look for most members of the trade to be out of the office by Thursday afternoon to enjoy their long weekend. In the meantime, we expect sellers to remain uninterested in taking prices lower, especially considering we will struggle to see the slaughter exceed 500,000 head this week.
Meanwhile, leather business is facing its usual summer doldrums, while we are hearing an increasing number of reports of tanners who are asking to delay shipments for a variety of reasons. In the meantime, producers insist that they possess strong sold-forward positions and from where we sit, it appears that by the middle of July if things continue on their current pace, it is likely things will come to a head by then.
For now, we believe that sellers will continue with their current mentality of offering only a limited number of selections, while willing to listen to unsolicited bids on hides not listed on their offer lists. Meanwhile, we continue to believe that some of the traders have been quietly concluding business at levels under the last reported traded levels, while we also believe that some of the packers are also quietly selling hides direct at levels lower than they are reporting.
