US Perspective - 19.5.15
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Interest on US big packer hides picked up last week, especially by Korean tanners and the appearance of short covering by miscellaneous traders. Meanwhile, interest from Chinese tanners was sporadic, while sources claim hide selections priced at over $100 delivered appear as if they are struggling to find enough interest.
Opinions are mixed as to whether packers sold a week’s worth of production last week. Meanwhile, trading levels for the most part were steady to incrementally higher, while there are a few isolated claims of some packers able to squeeze buyers to pay a couple of dollars more than the last reported levels. However, it is believed these trades were for limited volumes.
As to trading levels, HTS sold in a range as low as $83 (FOB), while some sold as high as $86.50-$87 (FOB) but quantities were limited. BS sold last week around $84 (FOB), BBS sold at $93-$95 (FOB) depending in producers. Sales of HNS were reflecting $95-$96 (FOB), while sales of Jumbo HTS check in at $95 (FOB) and Jumbo BS at levels of $96 (FOB).
Meanwhile, interest on cows was reported as disappointing. Sources blame the pollution problems in China, more-than-ample offers of similar selections from other parts of the globe and new leather orders that appear geared towards more aniline type leather. Overall, it is unlikely producers sold a week’s worth of production, while trading levels drifted lower last week.
As to trading levels we were aware of, we heard HNDC were selling at levels of $72-$75 delivered; while one seller insisted they sold at $75 (FOB); however, likely this was for very limited volume. Meanwhile, sales on HNC hovered around $66-67 delivered, while sales of HBC ran close to $62-$63 delivered.
THE LOOK AHEAD
A possible stalemate could develop in the big packer market, especially if packers have their sights set on pushing / lobbying for an increase in prices. Overall, many people are of the opinion that there has not been a substantial change in fundamentals of the market and with slaughter levels on the rise, we think that sellers’ best option may be extending their positions at steady levels.
Meanwhile, with the slow season for most buyers and split prices still under pressure, we cannot see buyers rushing to buy, especially at higher prices, while keeping in mind that most agreed to lower leather prices on new business. In the meantime, many tanners still struggling with tight cash flows and Chinese banks have tightened their requirements.
As it pertains to cowhides, we are of the opinion this market still appears to be searching for a trading plateau. There are rumours of producers in the States who are not well sold and this, coupled with pollution problems still pending in the northern China and thoughts the US cow kill may rise in May or June, is likely to encourage sellers to try to sell into this market.
