US Perspective - 17.3.15
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Things were not nearly as active in the big packer market as sellers were expecting. As the week progressed, it became clear tanners were not motivated buyers and for the most part, tanners interested in buying had no interest in the higher ideas of packers. This leant weight to claims that tanners do not possess the same amount of back orders as they did a year ago, coupled with thoughts most tanners are waiting to see what their many visitors will offer the next couple of weeks.
Meanwhile, packers appeared to have a strong resolve last week, passing on ideas from buyers at levels below their last reported trading levels, leading the trade to harbour the opinion that it is unlikely a week’s worth of production was sold last week.
What we found intriguing was the fact that the majority of offer lists only listed a limited number of selections for sale and in limited quantities. However, we heard from a number of sources that several sellers appeared as if they were willing to “listen” to ideas from perspective buyers on selections that they did not offer.
As to trading levels, BBS were sold at levels as high as $111-$112 delivered to tanners who are finding them of value, while we are aware of other sales at levels of $109-$110 delivered. Meanwhile, HTS were offered at levels from $104 to as high as $108 delivered; however, conventional wisdom believes sales were concluded at $103-$104, while sales on BS were all over the board depending on origin from $100-$104 delivered, while CBS were trade at $100 delivered. Also worth noting are reports there were a few more people asking about wet-blue hides last week.
In regards to the cowhide trade, sources report producers were buoyed with confidence entering the week, which in turn, encouraged most to look for prices ranging anywhere from $1-$3 higher than the week prior. Meanwhile, higher asking prices, coupled with a strong USD encouraged most tanners to take a step back from the cowhide market, although we understand there were still a decent number of tanners looking for HNDC last week.
Overall, popular opinion of the trade is that HNDC were sold for $1-2 higher than last week depending on producers, while sales on HBC also reflecting steady to incrementally higher levels; however, plenty of questions as to whether or not producers sold a week’s worth of production.
THE LOOK AHEAD
Several members of the US trade departed for Asia towards the end of last week and many more will be departing this week. That said, we tend to suspect offers will be limited at best, as those left behind will defer all offers to those traveling. That said, it will be interesting to see how committed those traveling are to their higher asking prices from last week, as sentiment of the trade is that interest from Chinese tanners since returning from their new year celebrations is falling short of expectations.
Meanwhile, sellers in the US will have to contend with the strong USD, as hides from origins outside the US will look that more attractive, and many of these, especially European ones, are easily interchangeable with US big packer hides. In the meantime, several members are leaning towards opinions that there is a softer undertone to the market and if this should come to fruition, we are not sure if cowhides can avoid downward pressure on their own.
At the end of the day, we have the same concerns as many others – that being we have seen record low harvest numbers the 1Q of 2015 and prices have remained flat to incrementally lower in the heart of the usual busy season for most tanners. Conventional wisdom knows harvest numbers will improve the 2Q of the year and many pundits (including your editor) are leaning towards the opinion we could see a slight increase in harvest numbers.
