US Perspective - 11.8.15
Courtesy of The Maxfield Report
Last week was not a particularly busy week of sales for producers. Popular opinion of the trade is a general lack of offers from producers, coupled with firmer prices ideas from sellers and reluctance from buyers to accept higher prices, led to a rather lacklustre week of sales. Overall, the sentiment is that it is unlikely that we will see a large round of sales reported in this week’s USDA Export Sales Report, while it appears that the hides that did exchange hands, did so at higher levels.
As it pertains to trading levels, some FOB prices include sales on HNS ranging from $73-$74, while trading on BBS reflected levels of $72. Meanwhile, isolated reports of sales on HTS at $65 and BS at $66 conflicted with rumours some sellers had passed bids at levels higher than this, while trading on CBS reflected levels of $62. Elsewhere, sources shared HNH sold as high as $57, while HBH sold at $54. In the meantime, interest on HNDC remains decent, allowing producers to push for higher prices with sales reported at $59 and unconfirmed rumours of sales at even higher levels, while trading on HNC reflected $46 and sales on HBC in the north at $43.
Elsewhere, a couple of things worth monitoring are continued reports of a substantial improvement in L/C [letters of credit] openings the past 2-3 weeks. According to reliable sources, this has allowed several producers to ship a significant number of hides the past couple of weeks, and in fact, have heard rumblings by several traders that they are struggling to ship as many hides as they would like. This is leading us to suspect that we will soon start to see a substantial number of shipments on the weekly Export Sales Report.
THE LOOK AHEAD
As to what we expect for this week, with momentum slowly moving in the direction of sellers, we suspect that the firmer tone of the market will continue. Further supporting this are forecasts that slaughter levels should remain at record low levels, while hide prices even at the last reported trading levels are still 40% lower than the record levels from early October.
For now, there is no question prices have found the bottom end of the trading range, as we are aware of several selections that are now trading at higher levels than a couple of weeks ago. That said, some are wondering if we are now primed for another ‘bull run’. As of this writing, we do not have a problem agreeing that the market is certainly firmer. However, we are not convinced there has been enough of a change in the overall fundamentals to warrant thoughts of prices moving substantially higher.
