US Perspective - 09.12.14
09/12/2014
www.themaxfieldreport.com
Last week saw several of the big packers begrudgingly resign themselves to the fact that the market is under pressure. At the start of the week, many of the packers had offer list that on the surface were unchanged from the week prior; however, there were numerous rumours accusing many of the agents for packers of pressing buyers for voluminous bids on several different selections of hides.
In the meantime, buyers recognising the softer tone of the market, coupled with numerous offers from producers from all over the globe, took ‘dead-aim” at lower prices, especially buyers who were able and willing to consider volume as well as prompt delivery of the product.
Sources share that the majority of ideas were running anywhere from $2-$4 under asking prices of packers, leading to numerous rumours of sales concluded at levels lower than many of the packers were willing to admit. Sellers only willing to concede marginal price decreases from their original asking prices lost the majority of their bids when countered, while those sellers more willing to concede to lower ideas are perceived to have booked a fair amount of business.
Trading levels on HNS were running close to $109 (FOB), while price ideas on BBS at $107 (FOB) and rumblings of lower levels could not be confirmed. HTS sold in decent volumes at $104 (FOB), while there were rumours of sales at $103 and BS for the most part sold at $100-$102 (FOB). CBS sold at $98 FOB.
Overall, opinions are mixed as to whether packers were able to sell a week’s worth of production.
As to the cowhide trade, although sources share that most producers saw a fair amount of interest last week, the consensus is that it was not enough to allow producers to liquidate their productions; it took lower trading levels to keep moving product.
Momentum in the market has swung in favour of buyers, and we look for the downward pressure on prices to continue this week, especially considering that we are likely to see slaughter levels close to 560,000 head this week and next. The good news for those selling hides is that early forecasts for slaughter levels the weeks of Christmas and New Year are calling for slaughter number under 500,000 head and this will take a bit of pressure at least off producers.
Sellers have approximately one month to ship as many hides as they can to Asia before a two-week shutdown to prevent product from arriving during the Chinese New Year closures.
In the meantime, the other challenge facing sellers is that producers from other parts of the world find themselves in a similar predicament. Overall, it appears the global supply of hides as well as skins is easily exceeding demand, leading us to remain of the opinion that at least for the next few weeks, your first sale very well could be your best sale, especially if the buyer is able to open a letter of credit and ship the product.
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