US Perspective - 10.3.15
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Members of the big packer trade report a mixed bag of trading last week. We have spoken with packers who have laid claims to enjoying a decent amount of business and in fact, sold so much that they rescinded their offer lists late in the week. Meanwhile, we have spoken with others who shared that they had a modest week of trading, while others shared that they were not particularly busy.
The one comment that all sources had in common was that packers appeared to have absolutely no interest in chasing the lower ideas of buyers and those buyers looking for “special offerings” were disappointed for the most part. In the meantime, we heard of some buyers drastically improving their ideas by a couple of dollars and even more once finding out that their ideas were too low, while overall, popular opinion was that prices were fully steady to incrementally higher last week.
Meanwhile, as to the number of hides sold last week, opinions vary whether or not packers were able to sell a week’s worth of production. However, we did hear from reliable sources that last week’s USDA Export Report did not include all of the wet-blue sales from the week prior, so there is a very good chance that we will see some carryover from the week prior and would not be surprised if we did not see a decent Export Sales Report.
In the meantime, we did have a member of the trade reporting that they were able to conclude some business over the weekend, laying claims to selling BBS at levels of $102, which we are sure some members of the trade will find “cheap”; especially considering there are claims by some that BBS are selling as high as $105.
Reports from members of the cowhide trade are claiming last week did not result in a lot of activity for most. For the most part, producers started the week with ideas $1-$2 higher than the week prior, while many buyers had ideas that they would try to purchase hides lower. By the middle of the week, buyers quickly discovered producers had no patience for lower ideas.
Meanwhile, the euro continues to devalue against the USD and this made it extremely difficult for those selling cowhides in the US to convince Asian buyers armed with USD not to buy European cowhides as they offered good value. In the meantime, interest on HNDC improved last week, leading to higher prices; however, there were plenty of rumours claiming some producers were passing levels higher than our last reported sale on HBC and especially HNDC.
THE LOOK AHEAD
As to what we expect this week, we look for sellers to try to continue the momentum from last week. Overall, the majority of sellers are laying claims to enjoying strong sold forward positions, while this might be possibly debatable, especially if we keep in mind how poor shipments have been so far in 2015.
That said, we do not expect much to change in the opinion of those selling hides. We expect offer lists to be limited again this week and look for asking prices to be no worse than steady with last week, if not higher. Meanwhile, sellers will need to be disciplined in their sales, as many organisations will have people departing for Asia this weekend / beginning of next week and we suspect they will want to ensure they have hides to offer their customer base.
In the meantime, harvest numbers continue to run at record low levels. However, in retrospect, they really are not that much different from a year ago. That said, one of our members pointed out towards the end of last week that we are in the midst of what is usually a busy time for most tanners. Keeping this in mind leads us to wonder what will happen when we start to see larger harvest numbers in April and May.
