US Perspective - 22.9.15
Courtesy of The Maxfield Report
The big packer trade are of the opinion last week was a sluggish week of trading, while there was plenty of confusion in the market place. There were only a modest number of sales recorded, with sales concluded at levels down $2-$3 versus their last reported traded levels. Meanwhile, a handful of sellers say they did not have to succumb to these lower levels, insisting that they were able to sell within a dollar of their last traded levels. As a result, there was plenty of confusion as to where product was trading last week; however, it appears is it is unlikely that packers sold their production last week.
This resulted in a wide range of trading levels with sales on BBS supposedly in a range as low as $80 delivered to as high as $84 delivered, while sales on HNS ranged from $82-$85 delivered. Trading levels on HTS were also in a wide range, as some insisted they could reach levels as high as $78-$79 delivered, while others insist some packers traded at $74-$75 delivered. There were also wide trading ranges on BS; however, this may have more to do with the producers. According to sources, producers known to have native and butt content in their production were able to achieve levels as high as $74-$75 delivered, while sources known to have only side brands and multiple brands report the best ideas were $71-$72 delivered.
Worth noting, we did have a couple of sales reported that were pending over the weekend as we have a sale on packer regular weight HTS checking in at $69, while sales reported on processor HTS reflect levels of $65.
Reports from members of the cowhide trade claim a difficult week of sales, as the majority of sources spoke of little if any interest. Sources share that buyers had very aggressive ideas, especially those buyers willing / able to consider volume. Producers were attempting to hold prices of HNDC steady; however, appears that plump cowhides continue to face softer undertones.
THE LOOK AHEAD
We believe offer lists will be more populated this week. This on the heels of poorer-than-expected export sales the last three to four weeks, coupled with the fact we saw the largest slaughter of the year last week and expectations are that this is likely to continue for the next few weeks. In the meantime, we believe the sold-forward positions of many producers have eroded slowly the past few weeks and tend to believe many producers do not possess as strong a position as they are advertising.
In the meantime, problems in Canada with bluetongue disease continues and shipments to its largest market (China) are not possible. This is likely to start to force the hand of some sellers and we would expect some producers to be looking to conclude business with tanners outside China for prompt shipment in order to keep product moving.
Elsewhere, there are still plenty of concerns about the lack of interest on wet blue splits and pundits say this confirms how dismal the lower-end leather business is for many tanners. Meanwhile, it still appears as if there are more-than-ample offers of plump cowhides and equivalent material from a number of producers around the globe and those looking for voluminous sales are likely not to like the ideas of buyers.
For now, we remain of the opinion the best option for those on the sale side is to continue to sell into the market and if we were a seller, we would be focused on selling to customers with a proven track record of taking delivery of their product and paying for their product on time.
