Courtesy of The Maxfield Report

www.themaxfieldreport.com

Consensus of the trade is that US big packer hides plateaued last week. Many sources reported several of the packers were laying claims to have enjoyed decent sales the week prior and supported these claims with only a limited number of offers last week. According to reports, many offer lists were absent of tanners’ favourite hide selections.

In the meantime, conflicting reports from tanners last week, as many were insisting that they were still receiving direct offers from packers at prices below their “official” asking prices. Elsewhere, it is rumoured traders were offering at levels lower than the last reported trading levels, while indicating to tanners they did not think the downward pressure is over.

In other news, one of the packers has drastically reduced the number of hides they are soaking, according to reports; soaking number is down 50% from levels earlier this year. According to sources, this will mean close to 50 containers per week of wet-salted HTS entering the market, as the producers attempt to whittle down their unsold inventory of wet-blue hides.

Overall, opinions are mixed as to how many hides exchanged hands last week, as we talked to some producers and traders who shared they were pleased with their sales. Meanwhile, several others and easily the majority report that business was disappointing. In regards to trading levels, we believe HTS sold in a range of $102-$105 delivered. Elsewhere, better-than-expected interest on BBS drove prices slightly higher to $109-$110 delivered. Meanwhile, prices of Jumbo and Super-Jumbo hides were under a bit of pressure with trading levels ranging from $112-$118 depending on selection and weight average.

Interest on cowhides last week was relatively uneventful as buyers and sellers struggled to agree on prices. The week started with most producers offering only a limited number of hides at slightly higher prices. Sources share buyers started the week with decent interest; however, at levels $2-$3 under last established trading levels sellers were reluctant to accept.

Overall, sales likely fell short of the slaughter; however, with sentiment of the trade that producers were well sold, this should not pose much of a problem. As far as trading levels, sources report HNDC sold at levels close to $83-$84 delivered, while trading on HNC was around $74 delivered. Elsewhere, decent demand for HBC was reported last week with sources sharing they are aware of trading levels at $64 delivered for material in the north.

THE LOOK AHEAD
As to what we expect this week, we believe that those selling hides will attempt to continue conveying a firm tone of the market, citing lower slaughter levels and decent sold-forward positions. Meanwhile, buyers as a group do not appear as if they are convinced that sellers are sold as far forward as they are pontificating and we look for both buyers and sellers jockeying for position this week.

Elsewhere, for many producers, this will be the last week that they can ship hides to Asia in order to have them arrive before the Lunar Holidays (Chinese New Year, February 19), although we have heard isolated reports that some tanners plan to have skeleton crew around during the holidays to receive shipments. Over the course of the next couple of weeks, the inability to ship to Asia in our opinion will certainly put sellers’ sold-forward positions to the test.

For now, we remain of the opinion the market is at a trading plateau, while we struggle to agree with pundits who are insisting that prices are in a position to move higher. Rather, we remain of the opinion that fundamental leather business has not changed since the second half of 2014 and considering prices of oil, cotton and other alternatives, probably best to continue to sell into the market.

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