US Perspective – 16.12.14
16/12/2014
www.themaxfieldreport.com
The decline of prices in the big packer market gathered some downward momentum last week as most selections were anywhere from $2-$3 / hide lower depending on the selection. A number of sources report both packers and traders pushing hard for bids, supported by numerous reports of “special” offerings with product needing to ship before January cut-out date for shipments to Asia.
Overall, opinions are mixed as to how many hides were sold last week, as we are aware of some who claim they sold a fair number of hides. Meanwhile, we are also aware of sellers who shared they were disappointed with business last week as the majority of bids that were countered were supposedly withdrawn by respective buyers.
In the meantime, numerous reports claiming there is a sizeable number of wet blue hides unsold are likely true. We have heard from reliable sources claiming a number of wet blue plants are not soaking as many hides as two to three months ago in an effort to alleviate the situation. This is leading to a number of rumours, with some claiming there may be as many as 1.5 million hides of wet blue unsold as of this writing and some pundits insist the number is even higher.
As to trading level from last week, we saw HNS sell at $113-$114 delivered, while sales on BBS reflected levels of $110-$111. Sources claim decent volume of HTS sold at $108 delivered, while some claim there were additional sales at $107 delivered. Elsewhere, BS sold in a range of $106-$108, while sales on CBS registered at $102-$103. Meanwhile, sales on heavier weight HTS ranged from $119-$123 delivered depending on weight average and sales on heavier weight BS ranged from $117-$121 delivered depending on weight average.
Reports from members of the cowhide trade for the first time in months actually had some positive undertones. We heard from sources in several directions that buyers collectively as a group refused lower ideas from buyers when attempting to sell HBC, while we are also hearing claims that price ideas from buyers on HNDC and HNC were not nearly as aggressive as previous weeks.
Overall, members of the trade are leaning toward opinions that perhaps cowhides are close to finding a bottom-end to the market, which is not that surprising considering we are close to seeing a million less cows slaughtered this year versus last year.
Sources share trading levels on HNDC were hovering around $81-$82 delivered, while better quality hides slightly higher. Sales on HBC reflected levels of $62-$63 delivered, while sales on HNC checked in at $72-$73 delivered.
THE LOOK AHEAD
As to what we expect this week, essentially, this is the last full week of trading for the 2014 calendar year, especially with the Christmas and New Year’s holidays next week and the week following. In regards to the big packer trade, we anticipate packers will be anxious to stop the recent slide on prices; however, members of the trade are still suspicious of packers’ sold-forward positions on wet salted hides and we look for buyers to try to bid prices lower. Meanwhile, the consensus of the trade is there are large unsold supplies of wet blue hides for sale and these hides could weigh heavily on efforts to sell wet salted hides.
As it pertains to cowhides, the sentiment of the trade is that prices of cowhides may have found some decent support last week and many pundits are leaning towards the opinion that cowhide prices have likely bottomed. Worth noting, we are hearing similar reports from Europe and Australia that cowhides have sold in decent volumes and if these reports are anywhere close to factual, we would tend to agree prices are likely near the bottom.
It is worth keeping an eye on is the number of cows coming to slaughter. The last six weeks has seen the number of cows in the slaughter mix spike from 18% to 21-22% of all cattle slaughtered. Although the number of cows being slaughtered is still at record low levels, some pundits are forecasting the number of cows in the slaughter mix will fall substantially following the New Year’s holiday with some calling for numbers to fall below the 100,000 head mark.
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