US Perspective - 02.02.16
02/02/2016
US Perspective - 02.02.16
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Reports from members of the big packer trade claim interest last week was disappointing, as most pundits were expecting a bit more interest from Asian tanners before departing for the Chinese New Year holiday. In the meantime, popular opinion of the trade is that packers could still sell hides last week; the only question was at how much of a discount, as the sentiment of the trade is that the larger the discount, the more hides one was able to sell.
Overall, the consensus of the trade is that packers likely failed to sell a week’s worth of production, as most packers were reluctant to trade hides at much more than a dollar or so below their last traded levels. There continue to be unconfirmed rumours insisting that a number of packers have excess supplies of unsold Jumbo and Super Jumbo steer hides, leading to plenty of claims of offers of these products in the lower $70s for prompt shipment.
Meanwhile, the only selection that appears to have traded close to its last established trading level is HNS, as interest from Korea for BBS has been noticeably less in the past couple of weeks. This explains why we have seen this selection lose some of its “lustre” the past ten days to two weeks. In the meantime, popular opinion is that most packers fail to possess the sold forward positions they are advertising.
We are looking for the next two weeks to be relatively uneventful, due to the pending holiday in Asia. We tend to lean with pundits who are of the opinion that many producers are entering the Chinese New Year period with their weakest sold-forward positions in the last several months.
Meanwhile, we continue to hear reports of a number of sellers struggling to obtain timely letter of credit openings and it is unlikely that we will see any improvement in this situation over the next couple of weeks, as banks will be closed to observe the holidays. This is likely to result in selling to traders to be a more attractive option, especially if the trade has cash and is able to ship product promptly.
We are of the opinion that the market is in the midst of a correction in prices and the next two weeks will provide a bit of a challenge for those looking to sell hides, especially those who are looking for something to ship promptly.
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