US Perspective - 25.11.14
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Last week saw interest on big packer hides improve compared to the past couple of weeks. Unfortunately, for those attempting to sell hides, the majority of the interest from buyers was running well below the ideas of sellers, who started the week with thoughts they would try to hold prices close to the levels of the week prior.
According to sources, by the middle of the week, packers/traders resigned themselves that if they were going to be able to sell hides in any kind of volume, they were going to have to negotiate prices. Once sellers decided to negotiate prices, popular opinion of the trade is that last week saw a fair number of hides exchange hands and overall, we would call prices $1-$2 lower than their last traded levels, depending on the selection.
In regards to trading levels, we can attest to HNS trading in a range from $111-$112, while sales on BBS reflected levels of $109. Meanwhile, reporting on HTS was “all over the board” last week. There we rumours of sales as low as $104, while we had trading reported for the most part at $105-$106, while we also had isolated claims by packers they sold as high as $108-$108.50.
In the meantime, side brands appear as if they suffered the largest price declines as we have BS reflecting levels from $102-$103, while rumours of trading as low as $100, while some packers insisted they sold as high as $106.50, while trading levels on CBS were no higher than $100.
We did have a few sales pending from over the weekend as we have sales on HTS at $106, while sales on BS reflect levels of $102. Meanwhile the only other sale is a HNS checking in at $111.
As it pertains to sales on cowhides, we are hearing reports of some producers laying claims to enjoying a decent week of sales once they resigned themselves that they would have to be willing to accept lower trading levels. Meanwhile, we also are aware of producers who made their best effort to hold prices in line with their last trading levels and it is believed that they did not enjoy a decent week of sales.
Trading levels last week saw HNDC dip below the $80 mark with numerous reports of $78-$79, while we heard offerings at levels of $85 delivered and higher appear as if they were ignored last week. In the meantime, sources share lower prices ideas on HNC and HBC brought a considerable more interested buyers to the table last week, as we understand HNC fell below the $70 level with sales at $69, while sales on HBC also fell below the $60 level with sales at $58.
We also had a couple of sales pending from the weekend with processors sharing they sold BS at $100 and HTS at $102.
THE LOOK AHEAD
As to what we expect this week, considering we have a holiday on Thursday and that it is not uncommon for many people in the US to parlay the holiday into a long weekend, we suspected many producers would have offered this afternoon (Monday). However, when checking with various sources, it appears sellers collectively as a group are going to wait until Tuesday to offer.
The holiday towards the end of the week will mean a much smaller slaughter. This, coupled with the fact there was a decent number of hides sold last week, will likely have a few buyers of the opinion that they do not have to consider lowering their prices. That said, we do not believe buyers are convinced that enough sellers sold their production last week and we suspect those out bidding on hides will be looking to pay even less for hides and very likely we will see a lacklustre week of trading this week.
In the meantime, as prices of big packer hides are down 4-5% from their highs seen in early September, it will be interesting to see how much further they will decline. Of course, if you speak to tanners they point to drop split values that are down as much as a third or more since their peak earlier this year, while leather orders are definitely lower for most shoe and handbag tanners.
The challenge we believe moving forward for those selling hides is that globally, there are many different parts of the world who appear as if they are carrying large unsold inventories of hides and until we see better demand to clean up these excess unsold supplies, sellers may be in for some difficult times.
