US Perspective - 14.7.15
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Prices of big packer hides were a “moving target” again last week and the inability of sellers to ship product timely, due to the non-performance of tanners, coupled with lacklustre demand. As a result, sellers were reported to be pressing hard to generate voluminous business for prompt shipment, especially as temperatures rose in most part of the US.
Overall, popular opinion of the trade is that prices slipped anywhere from $3-$5 depending on the selection, while there were numerous rumours insisting that trading on some selections may have taken place at even lower levels. It is believed that there were a fair number of hides sold last week. However, the question many members of the trade were asking was how much of this was “new” business and how much of this was hides being sold for a second or even a third time.
In the meantime, we were hearing some isolated reports of some positive news. A few sources said they were seeing interest from customers they had not seen in a while. In addition, we also heard isolated reports where some sellers were able to sway buyers to improve their ideas.
As to trading levels, we were hearing that sales on HTS started the week at levels of $70 delivered; however, by the end of the week, they were trading closer to $66-$67, while sales on BS started the week at $70-$72 and towards the end of the week were closer to $67-$68. Meanwhile, sales on BBS started out near $78 delivered, but by week’s end, $75-$76 was possible, while sales on HNS were a couple of dollars back of this.
Other trading levels had Jumbo and Super Jumbo hides taking another drastic downturn. Many are surprised due to not as many of these hides in the mix; however, one needs to keep in mind that this is necessary due to the number of high-prices hides that have not shipped yet. Meanwhile, CBS slid lower with sales at $65-$66 delivered by the end of the week, while interest on heifers was also lower with prices slipping another $3 / hide.
As it pertains to cowhides, it appears producers were experiencing similar issues as those in the big packer trade. Overall, although the number of cows in the slaughter mix are running at unseasonably low levels, producers are struggling to achieve timely liquidation of their product and have been forced to aggressively look for buyers with money and able to accept prompt shipments.
Trading levels we were hearing about had HNDC struggling to keep above $60 delivered, while there were plenty of rumours that HNC sold as low as $50 delivered. Meanwhile, HBC were not spared the pain of lower prices as we are hearing that they have now slipped below the $50 delivered level.
In the meantime, like big packer hides, opinions are that sellers were anxious to conclude voluminous business with it understood the hides had to ship promptly as sellers continue to battle with tanners guilty of non-performance.
Elsewhere, reports from Asia tanners say the downward pressure of the market has not yet subsided and there are leather buyers who are requesting tanners to consider additional price concessions on new leather orders, while there are also a number of tanners insisting that leather order for August / September is falling well-short of expectations. In the meantime, leather buyers are citing that they do not have as many orders as a year ago and this is starting to create some fierce competition amongst some tanners to ensure they maintain their market share.
THE LOOK AHEAD
As to what we expect for this week, considering there are still a substantial number of problems shipping hides to tanners, we will continue to see a situation that will not favour those selling hides. In the meantime, the good news for producers is that it appears as if slaughter levels will continue at substantially reduced levels, as one could only imagine where hide prices would be trading if there were seasonable slaughter levels.
In the meantime, as prices continue to drift lower, we are moving closer to the bottom. We are confident that prices will not fall to $0 and as we have said on other occasions, we are not aware of anyone taking hides to the landfill. That said, we believe that once the bottom has been reached, we will see a nice rebound in prices almost overnight, as there are simply too many tanners attempting to buy all of their hides at the bottom of the market, which is a difficult task to say the least.
