US Perspective - 18.11.14
US Perspective - 18.11.14
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Popular opinion of the trade is that prices of big packer hides drifted lower again last week, despite strong efforts by packers to try to convey a steady tone to the market. Last week started with most packers coming out with offer lists that were steady to only slightly different from the week prior; however, by the mid-point of the week it was clear that a number of packers and traders were a bit more willing to negotiate prices, especially with buyers willing to consider delivery in the next 2-3 weeks.
Overall, opinions are mixed to exactly how many hides exchanged hands last week, attributed to the numerous “special” offerings that were bouncing through the trade. Meanwhile, there are reports of packers who produce wet blue slowing their soaking levels due to a general lack of sales and if correct, this will put more wet salted hides into the market.
In the meantime, reports from overseas have a number of tanners complaining about leather orders and several insist orders are short of levels of a year ago. Meanwhile, numerous tanners do not appear motivated to take delivery of their outstanding shipments and there are unconfirmed rumours of packers/traders pushing customers to take delivery of their outstanding orders earlier than contracted.
Sources report trading levels last week have HTS trading close to $114-$115 delivered, trading on BBS in a range of $117-$119 depending on producer and weight average, and trading on HNS reflecting a range from $119-$120 depending on producer. Meanwhile, other sources are insisting these levels are over-stated claiming HNS sold as low as $112 FOB, BBS at $110 FOB and BS at $103-$105 depending on origin.
Reports from members of the cowhide trade remain pessimistic for the most part. We have heard reports of sellers becoming a bit more anxious, attempting to generate interest last week and many pressing buyers for voluminous bids. Overall, we have unconfirmed rumours of several sellers trading product at levels below levels reported on our price guide, while there are some members of the trade saying a fair number of hides may have sold last week at lower levels.
Trading levels reported last week have HNDC in a range from $80-$83 FOB with most of the opinion most product sold closer to bottom end of the trading range and even lower. Meanwhile, HNC sold at $70 FOB and speculation possibly lower, while same for HBC that were reported to be sold at $60 FOB.
THE LOOK AHEAD
As to what we expect this week, it will be interesting to see if packers finally adjust their offer lists to reflect levels they are willing to sell at or if they will continue to keep asking prices steady and choose to counter bids as they come in. This is resulting in some instances where material has traded close to $4-$5 under official asking prices on some selections. Meanwhile, we look for it to be very difficult to determine the true value of hides, as last week saw some packers reluctant to allow price guides to reflect where the lion’s share of trading was taking place.
In the meantime, sellers continue to point to record low slaughter levels and we could see additional reductions in the near-term. On the other side of the equation, we continue to hear reports of slow leather business for the many side leather tanners and even reports that a few automotive tanners not as busy as they were a couple of months ago.
Meanwhile, we hear problems with obtaining timely L/C openings. Elsewhere, reports claim that work slowdown by dock workers on west coast of the US is starting to cause problems and from our vantage point, appear several negative factors are coming together at the wrong time and the reduction we are seeing in the slaughterer is what will keep the market from “falling out of bed”.
