US Perspective - 23.2.16
23/02/2016
www.themaxfieldreport.com
Those members of the trade attempting to sell big packer hides reported they saw an improvement in enquiries compared with the previous couple of weeks, when Asian tanners were out observing Chinese New Year. The majority of buyers started the week with ideas well below the target prices of sellers, while it appears packers expressed no interest in chasing the lower ideas of buyers.
As the week progressed, buyers who were willing to improve their ideas were able to secure hides at levels equal to the last established trading levels. Buyers who refused to improve their ideas found themselves unable to secure any product, leaving many packers of the mindset that they came close to passing as much business as they booked. In addition, with harvest levels challenging the record low levels we experienced a year ago, is encouraging some packers to be bold enough to pass on to customers that they would likely attempt to raise asking prices on some selections.
In the cowhide trade, sources report that interest was sporadic at best. It appears there was more than ample interest on HNDC, which allowed most producers to trade at steady to slightly higher levels, while interest on HNC was reported as modest, allowing producers to hold prices steady. Meanwhile, sources report that interest on HBC has been rather lacklustre the past 2-3 weeks and this, coupled with some producers a bit more desperate for sales on this selection, resulted in many producers accepting levels $1-$2 lower than the last reported trading levels.
Overall, it is unlikely that producers sold a week’s worth of production and with harvest levels still running at levels close to 20% of the nation’s total, producers may find another difficult week of sales, especially on HBC.
THE LOOK AHEAD
We are of the opinion buyers and sellers will likely be locked in a stalemate, especially considering the fact that packers once again appear fixated on unseasonably low slaughter numbers, coupled with the fact that this is the typical busy season for most tanners.
What will be interesting to gauge is the reaction of tanners, especially considering that the majority were of the opinion heading into their CNY holiday that we would see hide prices coming under pressure, and many tanners possess order books that are not nearly as full as a year ago.
One other variable to monitor is the weekly shipment number of the weekly Export Sales Report. We have seen six consecutive weeks where shipments have fallen short of sales and unless we see a change, logically one could assume that those selling hides may be using “smoke and mirrors” to convey a sold-forward position that might not be quite accurate.
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